Pepsi Buying Russia's Wimm-Bill-Dann for $5.4B

PepsiCo (NYSE:PEP) unveiled a $5.4 billion deal on Thursday to assume control of Russian dairy and juice maker Wimm-Bill-Dann Foods (NYSE:WBD), making the U.S. company the largest food and beverage maker in Russia.

PepsiCo said it will offer to acquire the remaining shares of Wimm-Bill-Dann following completion of the original acquisition.

The deal “gives us clear leadership in the food-and-beverage industry in Russia, a fast-growing, strategically important market offering abundant opportunity,” PepsiCo CEO Indra Nooyi said in a statement.

The transaction, which still faces regulatory approval, would give PepsiCo a 66% stake in the Moscow-based company and values it at about $5.4 billion. The $33-a-share price tag on Wimm-Bill-Dann marks a 32% premium to the company’s 30-day average trading price.PepsiCo said it expects the deal to modestly add to its earnings in the first year, excluding one-time transaction costs and fees. It also sees the potential for pre-tax annual run-rate synergies of about $100 million by 2014.“Today we announced the planned coming together of our company with one of the most successful and best-known global companies. This represents a tremendous vote of confidence in the future of the Russian market,” said Sergei Plastinin, chairman of Wimm-Bill-Dann.PepsiCo plans to fund the deal through a combination of internal cash on hand and short-term debt financing. Once the deal is closed PepsiCo will employ about 31,000 people in Russia, the Ukraine and Central Asia.Wimm-Bill-Dann’s U.S.-listed shares surged 30.61% to $32.00. Shares of PepsiCo inched up 0.18% to $65.75.