PepsiCo sues Pepsi Bottling Group over meeting
MILWAUKEE — Soft drink maker PepsiCo Inc. said Monday it is suing its largest bottler, marking the company’s first move since Pepsi Bottling Group and another bottler rejected takeover bids last week.
PepsiCo said in a statement that Somers, N.Y.-based Pepsi Bottling intentionally failed to notify it of a recent board meeting where a shareholder rights plan was approved. Those plans, known as “poison pills,” are used to try to hold off hostile takeover attempts by making it more expensive for the suitor to acquire shares.
Purchase, N.Y.-based PepsiCo said in the suit filed in Delaware the action should be invalid. It’s asking for declaratory and injunctive relief.
A spokesman at Pepsi Bottling did not immediately return a message left seeking comment Monday.
Pepsi Bottling and PepsiAmericas last week rejected PepsiCo’s $6 billion takeover bid, saying it undervalues them.
PepsiCo said Monday it continues to believe its offers are fair.
The company, maker of brands like Gatorade, Pepsi colas and Tropicana juices, first made the offer in April, and has maintained that the deal would help transform its business and help it save at least $200 million a year before taxes.
The company says it will be able to respond more quickly to a changing marketplace, one where consumers are focusing less on soft drinks and more on juices and teas. If the sale went through, PepsiCo would control 80 percent of its total North American beverage volume. The company owns about 33 percent of Pepsi Bottling Group and 43 percent of Minneapolis-based PepsiAmericas.
At the company’s annual shareholder meeting last week — just days after the first rejection — Chief Executive Indra Nooyi told shareholders she wanted PepsiCo to own the bottlers, though she did not comment on raising the offer.
Pepsi Bottling Group was the first to reject the deal, calling it “grossly inadequate” last week. Three days later, PepsiAmericas also rejected the offer, saying it was “not acceptable and is not in the best interest of the company’s shareholders.”
That company, too, announced it had extended a shareholders rights plan to May 2010, which is another way to hold off hostile takeover attempts.
Analysts have said PepsiCo was likely to save more than $200 million a year and that the deal will go through if it offers more than the original $6 billion.
PepsiCo’s offer equates to $29.50 per for share for Pepsi Bottling Group and $23.27 per share for PepsiAmericas.
Shares of Pepsi Bottling fell 18 cents to $32.02 in midday trading Monday while shares of PepsiCo rose 15 cents to $49.90. Shares of PepsiAmericas fell 21 cents to $25.27.
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