PURCHASE, N.Y. — PepsiCo Inc. has entered into an agreement to sell Tropicana, Naked and other select juice brands across North America to PAI Partners, and an option to sell certain juice businesses in Europe, which 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, a private equity firm with experience in the food and beverage space, will be the majority shareholder of the transferred business, with PepsiCo retaining exclusive U.S. distribution rights to the portfolio of brands in its chilled direct-store delivery for small-format and foodservice channels.
These juice businesses delivered approximately $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo's overall operating margin in 2020, the company said. It expects to use the proceeds from the sale of these assets primarily to strengthen its balance sheet and to make organic investments in the business, the Purchase, N.Y.-based company said.
“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.”
Frédéric Stévenin, a managing partner at PAI, said, “We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company. 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, subject to customary conditions, including works council consultations and regulatory approvals.
Paris-based PAI currently is invested in Froneri, a major global ice cream manufacturer, and Ecotone, a leader in healthy and sustainable food. It manages approximately $17.8 billion of dedicated buyout funds and, since 1994, has completed 84 investments in 11 countries, representing more than $77.1 billion in transaction value.
PepsiCo products are consumed in more than 200 countries and territories. It generated more than $70 billion in net revenue in 2020, driven by a complementary food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker, Tropicana and SodaStream. PepsiCo's product portfolio includes a wide range of enjoyable foods and beverages, including 23 brands that generate more than $1 billion each in estimated annual retail sales.