Filed by
PepsiCo, Inc. pursuant to
Rule 425
of the Securities Act of 1933 and
deemed
filed pursuant to Rule 14a-12 of the
Securities
Exchange Act of 1934
Subject
Companies: The Pepsi Bottling Group, Inc.
Commission
File No.: 001-14893
and
PepsiAmericas,
Inc.
Commission
File No.: 001-15019
THE
FOLLOWING ARE QUESTIONS AND ANSWERS MADE AVAILABLE BY PEPSICO, INC. ON ITS
TRANSACTIONAL WEBSITE AT URL
HTTP://WWW.TRANSACTIONINFO.COM/PEPSICO:
Frequently
Asked Questions:
Q1)
What is the strategic rationale for this transaction?
Acquiring
The Pepsi Bottling Group and PepsiAmericas would significantly accelerate the
strategic transformation of PepsiCo’s North America Beverage business that is
already underway. By consolidating the three companies, PepsiCo can create a
very agile growth platform that will bring product and packaging innovation to
market more quickly, streamline manufacturing and distribution systems, and
provide greater flexibility in how the company goes to
market. Importantly PepsiCo also would be in a better position to
serve the changing needs of its retail and food service customers, to whom it
would be better able to offer customized solutions and “Power of One” food and
beverage bundling opportunities.
Q2)
Is this a change in your strategy?
PepsiCo
constantly re-assesses its strategy and re-examines its assumptions. Strategy is
doing what is right for the long term, given the circumstances at the time. Over
the last decade the industry has seen a proliferation of non-carbonated
beverages and functional beverages based on different manufacturing platforms
with different economics than traditional carbonated soft-drinks. And
those beverages have become a much bigger part of PepsiCo’s
portfolio. Furthermore, our retail and food service customers have
continued to consolidate. In this environment, PepsiCo believes a
fully integrated and more agile North American Beverage system would improve its
cost structure, generate stronger top-line growth over the long term, and more
effectively meet the needs of both customers and consumers.
Q3)
Why are you increasing your exposure to North American Beverages?
PepsiCo
believes in the long-term attractiveness of liquid refreshment beverages (LRB)
in North America. The LRB category is large ($100 billion) and profitable
(15-20% margins), and PepsiCo has a leadership position. After 2009,
it is anticipated that the category will return to growth consistent with
population growth. North American Beverages business remains a
critical component of the PepsiCo portfolio.
Q4)
What are the terms of the proposal?
PepsiCo
is offering shareholders of The Pepsi Bottling Group (NYSE: PBG) $29.50
per-share, which is a 17.1% premium over the closing price of the common stock
on April 17, 2009 and a 36% premium based on the 30-day average closing stock
price. PepsiCo is offering shareholders of PepsiAmericas (NYSE: PAS) $23.27 per
share, which is a 17.1% premium over the closing price of the common stock on
April 17, 2009 and a 33.4% premium based on the 30-day average
closing
stock price. The terms of the proposal are 50% in cash and 50% PepsiCo stock for
the each of the outstanding shares of The Pepsi Bottling Group and
PepsiAmericas.
The total
value of the shares PepsiCo is proposing to acquire is approximately $6
billion.
Q5)
Why pursue this now?
One key
factor is that PepsiCo can do this from a position of strength, when its
existing network is productive and executing well – and when the management
capabilities are in place to execute the changes that are necessary to maintain
our leadership position. This is the perfect time operationally to
begin a transformation that will set us up for the long-term growth of this
business.
Q6)
What are the financial benefits?
PepsiCo
expects that this transaction would be accretive to earnings-per-share by at
least 15 cents when synergies are fully realized, would unlock at least $200
million of synergies on an annual basis and would put us in a stronger position
to achieve future growth.
Q7)
How long will this process take to complete? What are the next
steps?
This is a
serious offer and at a significant premium to the market price of both The Pepsi
Bottling Group and PepsiAmericas. PepsiCo expects it will be reviewed with
seriousness by the independent directors of the two companies. The offers are
only proposals and, as such, are subject to PepsiCo negotiating and signing
definitive agreements with PGB and PAS.
Cautionary
Statement
This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or approval. If
PepsiCo, Inc. (“PepsiCo”) enters into
definitive agreements in connection with the proposed transactions with The
Pepsi Bottling Group, Inc. (“PBG”) and PepsiAmericas,
Inc. (“PAS”)
(the “Proposed
Transactions”), PepsiCo plans to file with the Securities and Exchange
Commission (“SEC”)
registration statements on Form S-4 containing proxy statements/prospectuses and
other documents with respect to each of the Proposed Transactions and definitive
proxy statements/prospectuses would be mailed to shareholders of PBG and PAS.
INVESTORS AND SECURITY HOLDERS
OF PBG AND PAS ARE URGED TO READ THE PROXY STATEMENTS/PROSPECTUSES AND OTHER
DOCUMENTS THAT WOULD BE FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTIONS.
If
PepsiCo enters into definitive agreements in connection with the Proposed
Transactions, investors and security holders will be able to obtain free copies
of the registration statements and the proxy statements/prospectuses (when
available) and other documents filed with the SEC by PepsiCo through the website
maintained by the SEC at http://www.sec.gov. Free copies of the registration
statements and the proxy statements/prospectuses (when available) and other
documents filed with the SEC will also be available free of charge on PepsiCo’s
internet website at www.pepsico.com
or by contacting PepsiCo’s Investor Relations Department at
914-253-3035.
PepsiCo
and its directors and executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the Proposed
Transactions. Information regarding PepsiCo’s directors and executive officers
is available in its Annual Report on Form 10-
K for the
year ended December 27, 2008, which was filed with the SEC on
February 19, 2009, and its proxy statement for its 2009 annual meeting of
shareholders, which was filed with the SEC on March 24, 2009. Other
information regarding the participants in the proxy solicitations and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statements/prospectuses and other
relevant materials to be filed with the SEC when they become
available.
Statements in this release that are
“forward-looking statements” are based on currently available information,
operating plans and projections about future events and trends. They inherently
involve risks and uncertainties that could cause actual results to differ
materially from those predicted in such forward-looking statements. Such risks
and uncertainties include, but are not limited to: PepsiCo’s ability to enter
into definitive agreements with respect to the Proposed Transactions; PepsiCo’s
ability to achieve the synergies and value creation contemplated by the Proposed
Transactions; PepsiCo’s ability to promptly and effectively integrate the
businesses of PBG, PAS and PepsiCo; the timing to consummate the Proposed
Transactions and any necessary actions to obtain required regulatory approvals;
the diversion of management time on transaction-related issues; changes in
demand for PepsiCo’s products, as a result of shifts in consumer preferences or
otherwise; increased costs, disruption of supply or shortages of raw materials
and other supplies; unfavorable economic conditions and increased volatility in
foreign exchange rates; PepsiCo’s ability to build and sustain proper
information technology infrastructure, successfully implement its ongoing
business process transformation initiative or outsource certain functions
effectively; damage to PepsiCo’s reputation; trade consolidation, the loss of
any key customer, or failure to maintain good relationships with PepsiCo’s
bottling partners, including as a result of the Proposed Transactions; PepsiCo’s
ability to hire or retain key employees or a highly skilled and diverse
workforce; changes in the legal and regulatory environment; disruption of
PepsiCo’s supply chain; unstable political conditions, civil unrest or other
developments and risks in the countries where PepsiCo operates; and risks that
benefits from PepsiCo’s Productivity for Growth initiative may not be achieved,
may take longer to achieve than expected or may cost more than currently
anticipated.
For
additional information on these and other factors that could cause PepsiCo’s
actual results to materially differ from those set forth herein, please see
PepsiCo’s filings with the SEC, including its most recent annual report on Form
10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not
to place undue reliance on any such forward-looking statements, which speak only
as of the date they are made. All information in this communication is as of
April 20, 2009. PepsiCo undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
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