Purchase, NY—PepsiCo, Inc. has entered into an agreement with PAI Partners to sell several of their North American juice brands, including Naked and Tropicana, as well as several juice businesses in Europe. According to a press release, this will result in combined pre-tax cash proceeds of approximately $3.3 billion while retaining a 39% non-controlling interest in a newly formed joint venture.
PAI is a private equity firm with experience in the food and beverage space. It will be the majority shareholder of the transferred business, while PepsiCo will retain exclusive U.S. distribution rights to the brands.
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“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.”
The juice businesses involved delivered approximately $3 billion in net revenue in 2020, with operating profit margins that were below PepsiCo’s overall operating margin in 2020, the press release states. PepsiCo will use the proceeds from this sale primarily to strengthen its balance sheet, and to make organic investments in the business.
“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 believe there is great growth potential to be realized through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories. 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.”
The transaction is expected to close in late 2021 or early 2022.