TO:
All PepsiCo Europe Employees
RE:
PepsiCo Proposal to Acquire PBG and PAS
Dear Friends and
Colleagues,
As
announced today, PepsiCo has reached agreements to acquire all of the
outstanding shares of common stock it does not already own in our two largest
anchor bottlers, The Pepsi Bottling Group (PBG) and PepsiAmericas (PAS). The
merger of the businesses, which is subject to shareholder and regulatory
approvals, would be a major strategic move to create a much more consolidated
PepsiCo beverage business.
The change would
strategically transform our business model across Europe, as well as in the
U.S., Canada and Mexico. It reflects the new operating realities of
our global marketplace: continued customer consolidation, the emergence of
new competitors and the major growth of non-carbonated beverages; all of which
require us to think and operate quite differently in terms of redefining our
right to succeed by taking a total system wide view of our assets and
organization.
For PepsiCo Europe,
the change would be transformational. It would increase our revenues
by about 35% and expand our manufacturing footprint by 27 plants. At
the same time, we would welcome a further 17,000 associates of PAS and PBG from
across Europe, directly into our business.
Merging the
businesses would create important new opportunities. For example, in
Russia and Eastern Europe, where we have scale businesses, it would allow us to
accelerate the outstanding “Power of One” work that is already under way and
enable us to further strengthen our position as a leading food and beverage
company. We would be able to simplify our operations
with the potential to
further integrate the successful Lebedyansky juice business, exploring opportunities to extend the model to Ukraine and other emerging markets in East and Central Europe. The prospects for strategic
advancement are equally exciting in markets like Spain, Turkey and Romania where
would have opportunities to fully leverage Power of One.
As
I see it, bringing the three businesses together will provide a broad range of
benefits. We’ll be able to bring innovation to the marketplace more
quickly and efficiently, serve our customers and consumers better and more fully
leverage the scale and power of our beverage and snack portfolio.
I
plan to share more information with you over the coming weeks and months, as
this process moves toward completion.
In
the meantime, I’d also like to pay a heartfelt tribute to all of you for such
terrific focus and determination in spite of what is clearly a tough year across
all business sectors in Europe. Your collective discipline and tenacity in
executing against a clear set of priorities is absolutely pivotal in enabling us
to successfully manage through the macro economic slowdown, delivering strong
bottom line results and share performance. I’m proud of what the team has
delivered and confident in the tremendous teams and growth plans we are building
for the long terms consistent with our vision of becoming Europe’s premier Food
and Beverage company.
A
key part of that successful focus on both the short and long term is of course,
reflected in our close partnership with PBG and PAS. I’d encourage all of us to
remain tightly disciplined in working closely on the immediate needs of our
businesses whilst we also start to work together on the significant
opportunities ahead.
Thanks for your
continued support.
Zein
Cautionary
Statement
This
communication does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or approval. PepsiCo,
Inc. (“PepsiCo”) and The
Pepsi Bottling Group, Inc. (“PBG”) plan to file with the
Securities and Exchange Commission (“SEC”) a registration statement
on Form S-4 containing a proxy statement/prospectus and other documents with
respect to the proposed acquisition of PBG and a definitive proxy
statement/prospectus will be mailed to shareholders of PBG. PepsiCo and
PepsiAmericas, Inc. (“PAS”) plan to file with the
SEC a registration statement on Form S-4 containing a proxy statement/prospectus
and other documents with respect to the proposed acquisition of PAS and a
definitive proxy statement/prospectus will be mailed to shareholders of PAS.
INVESTORS AND SECURITY HOLDERS
OF PBG AND PAS ARE URGED TO READ THE APPLICABLE PROXY STATEMENT/PROSPECTUS AND
OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Investors
and security holders will be able to obtain free copies of the registration
statements and the proxy statements/prospectuses (when available) and other
documents filed with the SEC by PepsiCo, PBG or PAS through the website
maintained by the SEC at http://www.sec.gov. Copies of the documents filed with
the SEC by PepsiCo will be available free of charge on PepsiCo’s internet
website at www.pepsico.com
or by contacting PepsiCo’s Investor Relations Department at 914-253-3035. Copies
of the documents filed with the SEC by PBG will be available free of charge on
PBG’s internet website at www.pbg.com
or by contacting PBG’s Investor Relations Department at 914-767-7216. Copies of
the documents filed with the SEC by PAS will also be available free of charge on
PAS’s internet website at www.pepsiamericas.com
or by contacting PAS’s Investor Relations Department at
612-661-3883.
PBG and
its directors, executive officers and certain other employees may be deemed to
be participants in the solicitation of proxies in respect of the proposed
acquisitions of PBG. Information regarding PBG’s directors and executive
officers is available in its Annual Report on Form 10-K for the year ended
December 27, 2008, which was filed with the SEC on February 20, 2009,
and its proxy statement for its 2009 annual meeting of shareholders, which was
filed with the SEC on April 7, 2009. PAS and its directors, executive officers
and certain other employees may be deemed to be participants in the solicitation
of proxies in respect of the proposed acquisitions of PAS. Information regarding
PAS’s directors and executive officers is available in its Annual Report on Form
10-K for the year ended January 3, 2009, which was filed with the SEC on March
4, 2009, and its proxy statement for its 2009 annual meeting of shareholders,
which was filed with the SEC on March 18, 2009. Other information regarding the
participants in the proxy solicitations and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
proxy statements/prospectuses and other relevant materials to be filed with the
SEC when they become available.
Statements in this release that are
“forward-looking statements” are based on currently available information,
operating plans and projections about future events and trends. They inherently
involve risks and uncertainties that could cause actual results to differ
materially from those predicted in such forward-looking statements. Such risks
and uncertainties include, but are not limited to: PepsiCo’s ability to
consummate the acquisitions of PBG and PAS and to achieve the synergies and
value creation contemplated by the proposed acquisitions; PepsiCo’s ability to
promptly and effectively integrate the businesses of PBG, PAS and PepsiCo; the
timing to consummate the proposed acquisitions and any necessary actions to
obtain required regulatory approvals; the diversion of management time on
transaction-related issues; changes in demand for PepsiCo’s products, as a
result of shifts in consumer preferences or otherwise; increased costs,
disruption of supply or shortages of raw materials and other supplies;
unfavorable economic conditions
and increased volatility in foreign exchange rates; PepsiCo’s ability to build
and sustain proper information technology infrastructure, successfully implement
its ongoing business process transformation initiative or outsource certain
functions effectively; damage to PepsiCo’s reputation; trade consolidation, the
loss of any key customer, or failure to maintain good relationships with
PepsiCo’s bottling partners, including as a result of the proposed acquisitions;
PepsiCo’s ability to hire or retain key employees or a highly skilled and
diverse workforce; changes in the legal and regulatory environment; disruption
of PepsiCo’s supply chain; unstable political conditions, civil unrest or other
developments and risks in the countries where PepsiCo operates; and risks that
benefits from PepsiCo’s Productivity for Growth initiative may not be achieved,
may take longer to achieve than expected or may cost more than currently
anticipated.
For
additional information on these and other factors that could cause PepsiCo’s
actual results to materially differ from those set forth herein, please see
PepsiCo’s filings with the SEC, including its most recent annual report on Form
10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not
to place undue reliance on any such forward-looking statements, which speak only
as of the date they are made. All information in this communication is as of
August 4, 2009. PepsiCo undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.