PepsiCo to buy Wimm-Bill-Dann in eventual $5.4bn deal

By Guy Montague-Jones

- Last updated on GMT

Related tags: Pepsico, Indra nooyi

PepsiCo has revealed its intention to buy 66 per cent of Wimm-Bill-Dann Foods for $3.8bn with plans to acquire the remaining shares following completion of the initial deal.

Acquiring Wimm-Bill-Dann will allow PepsiCo to significantly expand its stake in the Russian market and build its portfolio of dairy products and juices.

PepsiCo said Wimm-Bill-Dann, which has grown in 18 years from a one room business to a company employing 16,000 people, is a leader in the dairy market and holds a solid position in juice.

Growth ambitions

The full acquisition, which values Wimm-Bill-Dann at $5.4bn, is designed to help PepsiCo achieve its nutritional growth and emerging market ambitions.

A deal will raise PepsiCo’s annual global revenues from nutritious and functional foods from about $10bn to nearly $13 billion, taking it a step closer to its $30bn target by 2020.

Commenting on the acquisition, Indra Nooyi, PepsiCo chairman and CEO, focused on the opportunity a tie-up with Wimm-Bill-Dann presents in the dairy segment.

Nooyi said: “Dairy has a huge, untapped potential to bridge snacks and beverages. We see the emerging opportunity to ‘snackify’ beverages and ‘drinkify’ snacks as the next frontier in food and beverage convenience.”

Russian market position

With $5bn in revenue, PepsiCo will also become twice as large as its nearest food and drink rival in Russia. Its presence in key markets in Eastern Europe and Central Asia will increase as well.

PepsiCo is not the only company to be targeting the region as continued economic growth opens up the market to branded consumer goods. Danone announced this week that it had finalised a merger with Unimilk to create a new dairy business in Russia and other CIS countires with annual sales of about €1.5bn.

The acquisition of 66 per cent of Wimm-Bill-Dann will be completed pending government approvals. PepsiCo added that “at such time and on terms as are mandated by Russian law”​ the company will offer to acquire the remaining shares.

PepsiCo will fund the deal from internal cash on hand and short-term debt financing. Pre-tax synergies of about $100m are anticipated by 2014.

Related topics: PepsiCo

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