PepsiCo, a leading FMCG company has declared that it is in talks to sell Tropicana, Naked and other North American juice brands to a French private equity firm, PAI Partners.
The deal with PAI Partners will net pretax cash proceeds of $3.3 billion for Pepsi.
The food and beverage giant PepsiCo will also receive a 39% stake in a newly formed joint venture with PAI and the exclusive U.S. distribution rights for the juice brands for certain channels, like food service.
Ramon Laguarta, Pepsi CEO, speaking in a statement said: “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”.
“The deal 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.” He added
Meanwhile, PAI will also have the irrevocable option to buy certain Pepsi juice businesses in Europe.
The transaction is expected to close in late 2021 or early 2022. Pepsi said it will use the proceeds from the sale to strengthen its balance sheet and invest back in its business.
The juice business delivered about $3 billion in revenue for PepsiCo last year, but at operating profit margins that were below the company’s overall margins, it said.
In its annual report, Pepsi said falling juice sales offset gains for other products in North America, including water, sports drinks like Gatorade and energy drinks like Propel.