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Update: PepsiCo Says Quaker Acquisition Will Increase Revenues, Earnings

After meeting Saturday, the companies agreed on a purchase price of 2.3 Pepsi shares for each Quaker share.
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(Updated from 7:21 a.m. EST Monday)

Hot oats and soft drinks do go well together.


(PEP) - Get PepsiCo, Inc. Report

said it expects earnings and revenue to increase after its $13.4 billion acquisition of

Quaker Oats


is completed.

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PepsiCo, which finally secured the deal to buy Quaker this weekend after a bid in early November fell through, said it expects an annual growth rate of 7% in revenue. Earnings per share should grow by 1 cents to 2 cents in the first year. The food and beverage giant was expected to earn $1.45 a share in 2000 on revenues of $20.2 billion, and $1.64 a share in 2001 on revenues of $21.4 billion, according to analysts polled by

First Call/Thomson Financial

. It earned $1.24 a share in 1999 on revenues of $20.4 billion.

In a conference call with analysts, PepsiCo said increased growth would come from costs savings and growth in revenue when Quaker's Gatorade sports drink and PepsiCo's brands like Tropicana are combined.

The deal, which has a $420 million breakup fee, is also expected to result in PepsiCo having about 25% of the U.S. non-carbonated beverage business.

The newlyweds were greeted with cautious optimism by investors Monday morning. PepsiCo was up 81 cents or 1.9% to $43.19 on the

New York Stock Exchange

. Quaker Oats was up $1.88, or 2.1%, to $90.50.

Pepsi's Chairman and CEO Roger Enrico has said he will transfer both titles to Quaker President Steven Reinemund. Quaker Chairman and CEO Robert Morrison will also remain at the new merged firm.