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Pepsi's, Dr Pepper's Deals Better Than Coke's: Poll

Amid the recent bottling acquisitions at Coca-Cola and PepsiCo, we asked readers of TheStreet which soft drink company they think will get the most out of its deal.
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(Coca-Cola, PepsiCo story updated with recent news reflecting companies' growing desire to offer healthier products.)



) -- Amid the recent bottling acquisitions at


(KO) - Get Coca-Cola Company Report



(PEP) - Get PepsiCo, Inc. Report

, we asked users of


which soft drink company they think will get the most out of their respective deals.

The results were strongly delineated: The greatest percentage of voters felt that Pepsi, with 42.8% of the votes, would get the best bang from of its bottling buy. By this way of thinking, the deal with

Pepsi Americas


Pepsi Bottling Group

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will allow for higher cost savings and much more efficient distribution of products globally.

On the other hand, voters seemed skeptical of Coke's decision to buy

Coca-Cola Enterprise's


(CCE) North America operations -- and one can see where the lack of faith in that deal is coming from, given North America's slower-growth soda market profile. About 22.6% of voters sided with Coke on this one.

Happily sandwiched between the soda giants was

Dr Pepper Snapple


, which has been offered $900 million from Pepsi for rights to distribute Dr Pepper products in regions where they're distributed by Pepsi Bottling Group and Pepsi Americas. Industry watchers believe that Dr Pepper will also receive a lucrative offer from Coke, given that CCE is also a distributor of Dr Pepper products.

Dr Pepper Snapple's position brought it 34.5% of the votes in our poll.

Coca-Cola readily defends its North America bottling acquisition, even though its CEO Muhtar Kent said last December that Coke has "no need for a vertically integrated system," according to


At the same time, its decision has the support of Berkshire Hathaway's Warren Buffet. Berkshire holds a sizable stake in Coke.

Also noteworthy is that Coke director Herbert Allen, through his investment company Allen & Co., purchased 152,080 shares of Coke for about $52.95 a share on March 1, as reported by



signaling a bullish attitude towards the stock.

"Our new North American structure will create an unparalleled combination of businesses, which will serve as our passport to winning in the world's largest nonalcoholic, ready-to-drink profit pool," Kent said in a statement.

Kent also said that Coke will work "closely with our bottling partners to create an evolved franchise system for the unique needs of the North American market ... importantly, the creation of a unified operating system will strategically position us to better market and distribute North America's most preferred nonalcoholic beverage brands."

In 2009, Coke paid ACL (Allen & Company LLC), in which ACI (Allen & Company Incorporated) is an indirect equity holder, $1 million for investment banking services it provided in connection with the proposed business combination transaction between the Coke and Coca-Cola Enterprises, according to an SEC filing. The filing says that under the terms of the investment-banking services agreement, Coke is required to pay ACL a success fee equal to $15 million, less any advisory fees payable under the agreement, upon consummation of any transactions or series of transactions involving Coca-Cola Enterprises.

But Pepsi believes that it is ahead of the game in the soda wars, both synergistically and timing-wise.

"The reality is we are ready to go, they are just getting started," and "financially we will have more synergies," the head of Pepsi's new, combined North America bottling business told the

Wall Street Journal.

In related news, the

Associated Press

reports that Kent received $14.8 million in compensation in 2009, a 25% fall from $19.6 million in the prior year. According to


, Kent received roughly $7.4 million in stocks and options last year, which means that about half of his salary was directly tied to the company's stock performance.

Even as they continue to promote their sodas, both Pepsi and Coke are increasingly pushing for healthier product offerings globally, as concerns about obesity levels around the world intensify.

On April 9, Pepsi announced that it and India's Tata Tea have preliminarily agreed to forms a joint venture for healthy, non-carbonated drinks. Tata Tea owns the famous Tetley brand.

Meanwhile, Coke has upped its interest in

Innocent Drinks

, a U.K. smoothie company -- whose healthy offerings are well-known across the U.K. -- to 58%, or majority control.

-- Reported by Andrea Tse in New York


>>Who Will Get Fat Off the Soda Wars?

>>Coca-Cola's Upside Potential Evident

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