Pepsi Bottling Group rejects PepsiCo acquisition proposal

SOMERS, N.Y. The Pepsi Bottling Group announced Monday that its board of directors has rejected a proposal by PepsiCo to acquire all outstanding shares of common stock of PBG not owned by PepsiCo for a combination of cash and PepsiCo common stock.

The board acted based on the unanimous recommendation of a special committee of the board comprised of independent directors. The Special Committee was advised by Morgan Stanley and Cravath, Swaine & Moore.

The PBG board Monday sent the letter to PepsiCo Chairman and CEO Indra Nooyi, stating that "PBG values its longstanding relationship with PepsiCo, but the PBG board will not agree to a proposal which does not reflect the true value of PBG," and that the "proposal is substantially below PBG’s intrinsic value."

The proposal was announced immediately following PepsiCo's first-quarter earnings release on April 22.

PBG also announced that its board has approved adoption of a stockholder rights plan, retention arrangements for certain key employees and amendments to PBG’s bylaws regarding notice and informational requirements for stockholder actions. Further information will be filed on Form 8-K with the SEC.

The Pepsi Bottling Group is the world’s largest manufacturer, seller and distributor of Pepsi-Cola beverages. With approximately 67,000 employees and annual sales of nearly $14 billion, PBG has operations in the U.S., Canada, Greece, Mexico, Russia, Spain and Turkey.