PepsiCo to Sell Tropicana

Ernie NeffOrange Juice

PepsiCo, Inc. announced Aug. 3 that it has entered into an agreement with PAI Partners (PAI) to sell Tropicana, Naked and other select juice brands across North America. It also entered into an irrevocable option to sell certain juice businesses in Europe. PepsiCo said the actions will result in combined pretax cash proceeds of approximately $3.3 billion while retaining a 39% non-controlling interest in a newly formed joint venture.

PAI, a private equity firm, will be the majority shareholder of the transferred business. PepsiCo will retain exclusive U.S. distribution rights to the portfolio of brands in its chilled Direct Store Delivery for small-format and food-service channels.

PAI said it has significant experience in the food and beverage space and is currently invested in Froneri, which it called the world’s number 2 ice cream manufacturer, and Ecotone, a leader in healthy and sustainable food. Since 1994, PAI has completed 84 investments in 11 countries.

“This joint venture with PAI enables us to realize significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands,” said PepsiCo Chairman and CEO Ramon Laguarta. “In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet.”

“We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company,” said Frédéric Stévenin, a managing partner at PAI. “We are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands.”

PepsiCo said these juice businesses delivered approximately $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo’s overall operating margin.

The transaction is expected to close in late 2021 or early 2022.

Source: PepsiCo, Inc.

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