PepsiCo to sell Tropicana and Naked juice brands to private equity for $3.3bn

PepsiCo Inc updates

PepsiCo has agreed to promote a controlling stake in its Tropicana and Bare juice manufacturers to the French non-public fairness agency PAI Companions for $3.3bn, because it seeks to focus as a substitute on calorie-free drinks and merchandise it claims are higher for the surroundings resembling SodaStream.

PAI, which additionally owns the Häagen-Dazs and Mövenpick ice-cream manufacturers in a three way partnership with Nestlé, will purchase a 61 per cent stake in a brand new firm holding the model rights for the juices. Pepsi will personal the remaining 39 per cent.

The deal will “free” Pepsi to deal with progress in different areas resembling more healthy snacks, zero-calorie drinks and SodaStream merchandise, its chief government Ramon Laguarta stated in an announcement. It purchased SodaStream, which makes a tool that carbonates water, in a $3.2bn deal in 2018.

Tropicana and Bare are “each on the proper facet, and the mistaken facet” of a shift in direction of more healthy merchandise, Frédéric Stévenin, a managing associate at PAI, advised the Monetary Instances.

“The juice class has seen decrease progress within the final couple of years due to the sugar content material,” he stated. “There’s plenty of pure sugar in juice, however there are good issues too by way of nutritional vitamins and fibre.”

Nevertheless, he stated, gross sales had risen throughout the pandemic as a result of customers have been consuming breakfast at dwelling, and have been making an attempt to spice up their immune programs with merchandise excessive in vitamin C. This might give the manufacturers “momentum,” he stated.

The juice companies’ internet income was about $3bn in 2020, Pepsi stated.

Pepsi will use the sale proceeds to “strengthen its steadiness sheet”, it stated.

The shift in direction of a more healthy portfolio was initiated by Pepsi’s former chief government Indra Nooyi and continued by her successor Laguarta.

Massive shopper manufacturers resembling Pepsi and its rival Coca-Cola are looking for to chop their extra sugary merchandise, as youthful customers more and more go for more healthy options.

Nevertheless, the US shopper group has additionally been shifting its consideration to increasing its portfolio of vitality drinks. Pepsi acquired Rockstar Vitality Drinks final 12 months for $3.85bn, including a fast-growing model to its current steady of vitality drinks, which incorporates Mountain Dew Kickstart, Recreation Gas and AMP.

PAI, which manages about €15bn in non-public fairness funds, will purchase the enterprise from its seventh non-public fairness fund, a €5.1bn fund.

Source link