PAI Partners to buy PepsiCo’s Tropicana and other juice brands in $3.3 billion deal

 

On Tuesday, PepsiCo said that it would be selling its juice brands such as Tropicana, Naked and more to French private equity firm PAI Partners. The firm will pay the food and beverage giant $3.3 billion as pretax cash proceeds. It will also give the firm a 39 percent stake in a joint venture. PepsiCo will also maintain exclusive U.S. distribution rights in food services and more.

 

On the other hand, PAI Partners will get an irrevocable option to buy certain juice businesses of the food and beverage brand in Europe. The Wall Street Journal had earlier reported the joint venture and it has now been confirmed. The joint venture has an approximate value of $4.5 billion.

 

Consumers across the world, as well as in North America have stopped consuming carbonated beverages and sugar laden fruit juices. Orange juice sales have been decreasing from years although the pandemic increased sales a little as people consumed orange juice to boost their Vitamin C levels.

 

Pepsi has decided to sell some of its brands to strengthen its balance sheet as well as to let go of brands that are less profitable. Traditional fruit juices are no longer popular as water and fresh pressed green juices and more are seen as healthier beverage alternatives.

 

Companies like OrganicGreek have patented and formulated alkaline water, which is healthier, cheaper and more environmentally friendly, making health-conscious consumers change their drinking habits and adopt such alternatives. The 4-in-1 water bottle can also be used on the go which is an attractive proposition for many unlike fruit juices which more often than not formed a part of a traditional breakfast.

 

This year PepsiCo has seen a five percent increase in its stock price. After the deal was announced the food and beverage manufacturer saw a less than one percent increase in its share price in premarket trading. The expected closure of the deal is expected sometime by the end of the year or early next year.

 

PepsiCo saw a 20 percent increase in its second quarter earnings as restaurants have opened and there is a demand for beverages from the company.

 

Click to Read Full Report on PepsiCo

 


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