PepsiCo CEO reiterates interest in bottlers

MILWAUKEE — PepsiCo Inc.’s chief executive told shareholders Wednesday that the time is right to buy the soft drink and snack maker’s two biggest bottlers in North America — even after one of them rejected a deal.

Indra Nooyi said at the annual shareholder meeting that buying Pepsi Bottling Group and PepsiAmericas will save the company money in the long run and help it respond quicker to a changing marketplace.

The Purchase, N.Y.-based maker of Gatorade and Pepsi first offered $6 billion for the two companies last month. But Pepsi Bottling Group rejected the deal Monday, calling it “grossly inadequate.”

Nooyi, at the meeting in Plano, Texas, said the company wants to transform its beverage business with the purchase because the industry has changed as consumers shift from carbonated soft drinks to juices and teas.

The company also has to work with retailers who are consolidating and against smaller drink-making competitors coming into the business, she said. Buying its bottlers would allow Pepsi to come to market faster with newer products to respond to people’s changing tastes, Nooyi said.

“The time is right to integrate our two anchor bottlers within Pepsi so all of us can compete more competitively and continue to grow,” she said.

Somers, N.Y.-based Pepsi Bottling Group said Pepsi underestimated the savings it would see from such a deal — meaning the bottler was worth more to PepsiCo than it offered.

PepsiCo said it would see cost savings of $200 million per year from buying out its bottlers and controlling 80 percent of its North American beverage volume. But Pepsi Bottling Group and analysts say cost savings would be much more than that.

PepsiAmericas said it was still evaluating PepsiCo’s offer and would not comment.

Analysts have said the deal is likely to go through. PepsiCo just needs to boost its offer.