PepsiCo agrees to sell stake in $548m Thai soft drinks firm
In an annoucement to Singapore Exchange Securities Trading (the Singapore stock exchange) on Friday, alcoholic drinks firm THBEV said its board had given its approval for acquisition vehicle Thai Beverage Logistics to takeover Serm Suk at a target price of 58 Thai baht (THB) per share.
Serm Suk's shares were suspended from trading on Friday. The SSC group manufactures and distributes carbonated soft drinks, iced tea drinks, isotonic drinks and fruit juice. It also distributes energy drink products and THBEV's own Oishi Green Tea products.
Voluntary tender date set
THBEV said the deal would be funded with cash generated as a result of debt financing. The company said it intended to make a voluntary tender offer for 100% of SSC's shares (265.9m) to shareholders from September 15. PepsiCo's holding totals 110.46m shares (around $213m in value terms).
Under Thai law the tender offer period must then last a minimum of 25 business days but no longer than 45.
THBEV president and ceo Thapana Sirivadhanabhakdi told journalists that the acquisition would allow his firm to extend its local logistical nextwork and gain an efficient returnable bottle system, as well as gain a presence within non-alcoholic beverages.
The company owns and distributes brands including Chang beer and Mekhong and Sang Som rum. Its European division produces malt whisky, vodkas, gins, and liqueurs and it has nearly 20 distilleries in Scotland, France, Poland and Ireland.
Serm Suk has has agreed to continue distributing PepsiCo products - on an exclusive basis - until November next year.
In a statement sent to BeverageDaily.com regarding the sale, PepsiCo insisted that its "commitment to Thailand and the Thai market remains as strong as it has always been".
The company added: "PepsiCo will proceed with its plan to develop alternative bottling and distribution options for its beverage business in Thailand. The company has a substantial development fund in place and will utilise this to replace the previous bottling and distribution operations with Serm Suk.
"PepsiCo has had a successful partnership with Serm Suk for many years. We will continue to work closely with them until the conclusion of the exclusive bottling appointment in November 2012. This will ensure continuity of supply for our customers while PepsiCo establishes its new bottling and distribution operations."
Significant Thai growth
There were significant long-term growth opportunities within the Thai beverage market, PepsiCo added: "We have been in Thailand for 60 years. Our focus always has been, and always will be, on our customers and consumers."
PepsiCo noted that its brands were household names in Thailand, and said it planned to develop innovative, non-carbonated drinks to match Thai consumer tastes and preferences.
In late July PepsiCo pinpointed emerging markets as the key to growth in the second half of 2011, and reported beverage production volumes up five per cent in the first half, principally due to the acquisition of Russian dairy and juice company Wimm-Bill-Dann (WBD).
The soft drinks giant noted "challenging conditions" in the US beverage market, but chairman and ceo Indra Nooyi said: "We remain confident in our ability to continue to profitably grow our overall business, even in this uncertain economic environment."
