PepsiCo Inc. and its biggest bottler said Thursday that they are paying $1.4 billion (¤0.89 billion) to buy a majority stake in Russia's biggest juice company, JSC Lebedyansky. That price tag that makes it PepsiCo's biggest acquisition since it bought The Quaker Oats Co. in 2001, spokesman Dick Detwiler said. PepsiCo, the second-biggest US soft drink company and maker of Frito-Lay snacks, and bottler Pepsi Bottling Group Inc. will buy a 75.5 percent stake in Lebedyansky that is now held by the company's four biggest individual stockholders. Once the deal closes, the two companies will offer to buy the remaining shares, as required by Russian law. They could end up owning all the shares. PepsiCo Chief Executive Indra Nooyi has said the company has a “robust” acquisition pipeline that it will use to expand its product portfolio to include more healthier snacks and drinks. It sells brands such as Doritos, Cheetos, Lay's, Mountain Dew, Gatorade and Tropicana. Other recent acquisitions include the Ukraine-based juice maker Sandora, New Zealand-based Bluebird snacks and Izze and Naked Juice in the US. PepsiCo has a decades-old relationship with Russia that dates to when Soviet Premier Nikita Khrushchev tried Pepsi for the first time in 1959, according to a company statement. In 1974, the company opened a Pepsi-Cola bottling plant in Russia, making it the first Western-branded consumer product to be produced in the country. Today, PepsiCo and PBG together employ more than 7,000 workers in Russia. JSC Lebedyansky had 2007 annual revenue of about $800 million from its juice operations. PepsiCo's purchase price gives the entire juice business a value of roughly $2 billion (¤1.27 billion). The deal is subject to the spin-off of Lebedyansky's baby food and mineral water business to its shareholders as well as regulatory approvals. It is not expected to close before the third quarter. On Monday, Purchase-based PepsiCo and Pepsi Bottling said they bought Russian beverage company Sobol-Aqua JSC through a joint venture. Terms were not disclosed. The purchase excludes Lebedyansky's baby-food and mineral- water divisions, which will be spun off, Purchase, New York- based PepsiCo and Pepsi Bottling, located in Somers, New York. Lebedyansky, which started selling Ya Dessert smoothies this year, generates 85 percent of its revenue from juice. PepsiCo, the world's second-largest soft-drink maker, doubled its investment in Russian snacks and is building a second local factory as the country's decade-long economic expansion boosts demand. Like larger rival Coca-Cola Co., PepsiCo has been diversifying beyond sodas to lure health-conscious consumers. The Russian company also reported on Thursday that profit fell by 10 percent to $79.2 million in 2007 as costs surged. Revenue rose 33 percent to $945 million, with juices generating $803 million, baby food $124 million and mineral water $18 million. PepsiCo shares rose 22 cents to $70.40 at 9:38 a.m. in New York Stock Exchange composite trading. Pepsi Bottling increased 23 cents to $33.41. Lebedyansky slipped about 18 rubles to 2,157 rubles in Moscow trading, valuing the company at 44 billion rubles ($1.8 billion). The transaction values Lebedyansky at about $100 a share, with the juice business worth $88 a share and the other drink and baby-food units worth $12, according to Alfa Bank's Martin. The analyst cut Lebedyansky to “hold'' from “buy'' today and has a price target of $100 for the year-end. Lebedyansky, whose production is based in the town of Lebedyan in central Russia, was founded as a canning plant in 1967 by the Soviet Union's fruit and vegetable ministry, according to its website. The company's juice brands include Frustyle and Tonus. The company was 30 percent owned by Nikolai Bortsov, who is selling his shares along with the three “largest individual shareholders,'' including his son. __
