Fitch: PepsiCo unaffected

Fitch Ratings said that PepsiCo, Inc. announced that an agreement was reached to acquire the remaining outstanding common stock of its anchor bottlers, the Pepsi Bottling Group, Inc. and PepsiAmericas Inc.

According to the agency, PepsiCo will purchase the common stock of Pepsi Bottling and PepsiAmericas with 50% cash and 50% equity in a transaction valued at $7.8 billion.

The purchase price increased 30% from the initial offer on April 20, which was valued at $6 billion, also to be 50% cash and 50% equity, Fitch said, noting that it expects the cash consideration of $3.9 billion to be funded by debt.

Fitch added that it took rating actions on April 20 in anticipation of PepsiCo's eventual success in obtaining an agreement to acquire its bottlers as follows: downgraded PepsiCo's issuer default rating to A+ from AA-; affirmed Pepsi Bottling's issuer default rating at A+ but downgraded debt guaranteed by PepsiCo to A+ from AA-; and upgraded PepsiAmericas issuer default rating to A+ from A.

Based on the initial offer, Fitch said it calculated pro forma leverage for the Pepsi system of 1.7 times on a total debt-to-operating EBITDA basis.

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