Pepsi Bottling Rejects Pepsi Takeover Bid

The Pepsi bottler called the proposal from PepsiCo 'grossly inadequate'.
Author:
Publish date:

Pepsi Bottling

(PBG)

said Monday it has rejected as "grossly inadequate" a proposal by

PepsiCo

(PEP) - Get Report

to acquire the bottler.

PepsiCo, which currently owns 33% of Pepsi Bottling, in April offered $29.50 a share for the remaining stake that it doesn't already own. It initially spun off Pepsi Bottling in 1999.

The $6 billion proposal for Pepsi Bottling and

PepsiAmericas

(PAS)

would have let PepsiCo control about 80% of its total North American beverage volume.

Shares of Pepsi Bottling closed Friday at $31.41.

In a letter to PepsiCo, Pepsi Bottling said the value of the proposal is "substantially below PBG's intrinsic value," and is at "virtually no premium to market" given Pepsi Bottling's first-quarter earnings and the company's upward revision to full-year per-share earnings and operating free cash flow guidance.

Pepsi Bottling said it values its relationship with PepsiCo, but its board won't agree to a proposal that doesn't reflect the "true value" of the company.

Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.