Four Largest Shareholders Sold 75.53% of Lebedyansky to PepsiCo
OREANDA-NEWS. On 21 March 2008 was announced, that four largest individual shareholders have signed a conditional agreement to sell 75.53% of Lebedyansky’s Juice business to PepsiCo
Highlights:
Four largest individual shareholders of JSC Lebedyansky (“Lebedyansky” or the “Company”) (RTS: LEKZ) enter into a conditional agreement with PepsiCo to sell their shares in Lebedyansky totalling 75.53%, excluding the Baby Food and Mineral Water business, for US\\$1,357 million or US\\$88.02 per share (the “Transaction”). PepsiCo plans to assign its rights to buy the 75.53% stake to a joint venture between PepsiCo and The Pepsi Bottling Group (“PBG”) in which PepsiCo will retain a majority stake.
This price implies an Enterprise Value for 100% of Lebedyansky’s Juice business (excluding the Baby Food and Mineral Water business) of US\\$2,012 million, including net debt and adjustments of US\\$216 million.
The agreement is conditional upon, amongst other things, the separation and spin-off of Lebedyansky’s Baby Food and Mineral Water business, which will not be acquired by PepsiCo/PBG.
Upon completion of the Transaction:
PepsiCo/PBG, through their joint venture, will make a mandatory offer to purchase the remaining Lebedyansky shares they do not own;
in addition, all Lebedyansky shareholders will receive shares in the spun-off Baby Food and Mineral Water business pro rata to their shareholding in Lebedyansky as at the GM Record Date. The GM Record Date is expected to be 28 March 2008. Only those Lebedyansky shareholders registered as such at the GM Record Date will be entitled to vote at the GM and receive shares in the Baby Food and Mineral Water business.
Completion of the spin-off and the acquisition of the 75.53% stake in Lebedyansky by PepsiCo/PBG is expected in Q3 of 2008.
Lebedyansky announces that its four largest individual shareholders have signed a conditional agreement with PepsiCo to sell their shares in Lebedyansky totalling 75.53% for a total cash consideration of US\\$1,357 million or US\\$88.02 per share. PepsiCo plans to assign its rights to buy the 75.53% stake to a joint venture between PepsiCo and PBG in which PepsiCo will retain a majority stake. PepsiCo/PBG’s offer values 100% of the Juice business at US\\$1,797 million on an Equity Value basis and US\\$2,012 million on an Enterprise Value basis, assuming net debt and separation adjustments of US\\$216 million as at 31 December 2007.
The agreement is conditional, amongst other things, on the separation of the Baby Food and Mineral Water business from the Juice business, and completion of the spin-off of the Baby Food and Mineral Water business to Lebedyansky’s existing shareholders (including the four selling shareholders). Therefore, upon acquisition by PepsiCo/PBG of the 75.53% stake, Lebedyansky will include the Juice business only. Certain matters essential for completion of the proposed spin-off of the Baby Food and Mineral Water business will be subject to approval by the shareholders of Lebedyansky at a General Meeting (“GM”) which will take place within 80 days after the Board of Directors meeting of Lebedyansky. The sale of the 75.53% stake is also subject to other customary conditions, including regulatory approvals. The proposed spin-off and acquisition of the 75.53% stake are expected to complete in Q3 of 2008.
As part of the spin-off process, each shareholder in Lebedyansky (save for those who voted against the spin-off or did not participate in voting and requested to be redeemed by Lebedyansky) will receive new shares in the Baby Food and Mineral Water business pro rata to the stake in Lebedyansky held on the date as of which a list of shareholders having the right to participate in the GM will be compiled ("GM Record Date"). The Board of Directors of Lebedyansky will meet before 28 March 2008 to determine the GM Record Date, which is expected to be 28 March 2008. Lebedyansky shares traded, settled and recorded in the Lebedyansky register (or the depository accounts if the Lebedyansky shares are held through nominees) after the GM Record Date will not give the shareholders the right to receive shares in the Baby Food and Mineral Water business.
Following the spin-off, shares in the Baby Food and Mineral Water business will not be quoted on any stock exchange.
CPV (Center of Professional Valuations), a licensed appraiser under Russian law, was appointed by the Company to prepare an independent valuation of the Baby Food and Mineral Water business post separation to determine its fair value. The independent valuation, prepared in accordance with applicable Russian legal requirements, took into account the standalone forecasts of the Baby Food and Mineral Water business after the separation from Lebedyansky. The independent valuation of the Baby Food and Mineral Water business is US\\$326 million on a debt and cash free basis. Net debt and separation adjustments are estimated at US\\$75 million as at 31 December 2007.
The four selling shareholders have indicated that they will remain committed to the future development of the Baby Food and Mineral Water business which, in their view, has attractive growth prospects. The Baby Food and Water business will have a new senior management team, which will be announced in due course. Yuri Bortsov is expected to become the Chairman of the Baby Food and Water business.
Upon completion of the acquisition of the 75.53% stake, as required by Russian law, PepsiCo/PBG will make a mandatory offer to purchase the shares held by all remaining shareholders in Lebedyansky shortly after the transaction closes.
Commenting on the announcement, Chairman of Lebedyansky Yuri Bortsov said:
“We are pleased to have reached this agreement with PepsiCo/PBG, outstanding companies that bring a long heritage of investing in Russia and a clear commitment to the growth and success of Lebedyansky. They will bring significant investment and distribution strength and ensure that this company remains a strong, vibrant competitor.”
Commenting on the announcement, CEO of PepsiCo International and Vice Chairman of PepsiCo, Michael White said:
“This agreement provides us with a strong platform for continued expansion in one of the world’s fastest growing juice markets and advances the global transformation of PepsiCo/PBG’s product portfolio. Combining Lebedyansky's strengths with those of PepsiCo, one of the world's largest makers and sellers of branded juice, and PBG, our largest bottler, will create vast opportunities. We are committed to investing in Lebedyansky’s brands and building an even brighter future for this great Russian company.”
Commenting on the announcement, President and CEO of The Pepsi Bottling Group, Eric Foss said:
“Russia represents our biggest growth market, and we are making smart investments that further enhance our business there. Adding Lebedyansky’s strong brands and capable people to the powerful PBG-PepsiCo partnership will enable us to be at the forefront of the continued expansion of the Russian juice category.”
Action to be taken by Lebedyansky shareholders
Board of Directors of the Company is due to meet before 28 March 2008 to adopt a resolution calling for a GM of Lebedyansky shareholders to consider and vote on the proposed spin-off and other matters essential for completion of the spin-off. The GM will take place within 80 days after the meeting of the Board of Directors.
Shortly after the Board of Directors, Lebedyansky shareholders will receive a notice of the GM, which will specify, among other things, the agenda of the GM, the procedures for voting and conditions and terms of redemption of Lebedyansky shares adopted at the meeting of the Board of Directors.
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