Pepsi Bottling Group rejects offer from PepsiCo, adopts rights plan

By Lisa Kerner

Charlotte, N.C., May 4 - Pepsi Bottling Group, Inc. said its board of directors, based on the unanimous recommendation of its special committee, turned down PepsiCo, Inc.'s "grossly inadequate" offer to acquire the company's outstanding shares.

In addition, Pepsi Bottling's board adopted a stockholder rights plan, retention arrangements for some key employees and amendments to the company's bylaws regarding notice and informational requirements for stockholder actions.

Further information about the plan and amendments will be filed on a form 8-K with the Securities and Exchange Commission.

PepsiCo, a Purchase, N.Y., food and beverage company, offered to acquire Pepsi Bottling for $14.75 in cash plus 0.283 shares of PepsiCo common stock for a total value of $29.50 per share.

Somers, N.Y.-based Pepsi Bottling is the world's largest manufacturer, seller and distributor of Pepsi-Cola beverages.

In a Monday letter to PepsiCo chairman and chief executive officer Indra Nooyi, Pepsi Bottling said PepsiCo's offer undervalues Pepsi Bottling and was opportunistically timed ahead of the company's first-quarter earnings announcement on April 22.

According to Pepsi Bottling, it "exceeded Wall Street expectations for the quarter, raised its full-year guidance for earnings per share and operating free cash flow, and provided details of its plans to achieve over $250 million in cost and productivity savings in 2009 on a standalone basis."

As previously reported, PepsiCo also offered to acquire all of the outstanding shares of PepsiAmericas, Inc. it does not already own for $11.64 in cash plus 0.223 shares of PepsiCo common stock for a total value of $23.27 per share.

Minneapolis-based PepsiAmericas is the world's second-largest manufacturer, seller and distributor of PepsiCo beverages.

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