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PepsiCo to Sell Tropicana and Other Juice Brands to Private-Equity Firm for $3.3 Billion

PepsiCo agrees to sell its Tropicana, Naked and other juice brands to private-equity firm PAI Partners in a $3.3 billion after-tax all-cash deal.

PepsiCo  (PEP) - Get PepsiCo, Inc. Report on Tuesday said it agreed to sell its Tropicana, Naked and other juice brands to private-equity firm PAI Partners in a deal that it said will result in after-tax cash proceeds of $3.3 billion and allow it to focus on healthier snacks and zero-calorie beverages.

PepsiCo said it will sell the brands across North America, and an irrevocable option to sell certain juice businesses in Europe, while retaining a 39% non-controlling interest in a newly formed joint venture.

PAI, a food and beverage focused private-equity firm, will be the majority shareholder of the transferred business, with PepsiCo retaining exclusive U.S. distribution rights, the companies said in a joint statement. 

"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.

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"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."

The 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, according to PepsiCo.

PepsiCo expects to use the proceeds from the sale to strengthen its balance sheet and make organic investments in the business. The transaction is expected to close in late 2021 or early 2022, subject to customary conditions and regulatory approvals.

PepsiCo last month reported better-than-expected second-quarter earnings and said it sees 11% earnings growth and 6% revenue growth in the second half of the year, both modestly higher than previous forecasts.

At last check, shares of PepsiCo were up 0.2% at $156.64. The stock has risen 8.35% year to date.