PepsiCo, Tingyi Holding form alliance in China
Nov. 4, 2011
PURCHASE, N.Y. — PepsiCo, Inc. and Tingyi Holding Corp., one of the largest food and beverage companies in China, have announced an agreement to form an alliance in China. The alliance would make Tingyi’s subsidiary, Tingyi-Asahi Beverages Holding Co. Ltd., PepsiCo’s franchise bottler in China.
“To win globally, we need to have absolutely the best business partners locally,” said Indra K. Nooyi, chairman and chief executive officer of PepsiCo. “Tingyi has a history of successful partnerships with other companies, and we believe this proposed alliance will combine Tingyi’s superb distribution reach with PepsiCo’s innovation prowess, significantly enhancing our beverage business in China in the near term while maximizing PepsiCo’s future growth potential in the fastest-growing beverage market in the world. This is a positive deal for PepsiCo, Tingyi, our existing Chinese bottling partners and consumers in China.”
PepsiCo currently has 24 company-owned and joint-venture bottling operations in China. With the approval of the transaction, PepsiCo will transfer indirect equity interests in the bottlers to Tingyi-Asahi and will receive as consideration a 5% indirect equity interest in Tingyi-Asahi. PepsiCo also will have the option of increasing its indirect equity interests in Tingyi-Asahi to 20% by 2015. Tingyi-Asahi will partner with PepsiCo’s current bottlers to manufacture, sell and distribute PepsiCo’s soft drink and Gatorade brands and will begin co-branding its juice products under the Tropicana name with a license from PepsiCo.
The agreement is expected to bring innovative new products to market faster, improve operating efficiency by reducing costs and combining local and global expertise in manufacturing and distribution, and provide better localized service to PepsiCo’s national and food service customers in China.
The transaction is still subject to regulatory and shareholder approval.