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8-K - FORM 8-K - PEPSICO INC | y93310e8vk.htm |
Exhibit 99.1
Tingyi Holding and PepsiCo Enter into Agreement to
Form Strategic Alliance in China
Form Strategic Alliance in China
Tingyi Subsidiary, Tingyi-Asahi Beverages,
to become PepsiCos franchise bottler in China
to become PepsiCos franchise bottler in China
PepsiCos move to franchise system consistent with its
business model in many other international markets
business model in many other international markets
Alliance expected to create long-term value for Tingyi and
PepsiCo shareholders through greater operating efficiencies
and future growth
PepsiCo shareholders through greater operating efficiencies
and future growth
Creates expanded platform to capitalize on growing China
beverage market
beverage market
Tingyi to bolster product offerings with addition of PepsiCos
world-class brands
world-class brands
PepsiCo to extend the national distribution of its beverage
brands in China
brands in China
TIANJIN, CHINA and PURCHASE, NY, Nov. 4, 2011 Tingyi (Cayman Islands) Holding Corp. (Tingyi
Holding) (0322.HK), one of the major food and beverage companies in China, and PepsiCo, Inc. (NYSE:
PEP), the worlds second largest food and beverage business, today announced they have entered into
an agreement to form a strategic alliance in China. Under the terms of the agreement, Tingyis
beverage subsidiary, Tingyi-Asahi Beverages Holding Co Ltd (TAB), will become PepsiCos franchise
bottler in China. TAB, whose product offerings include ready-to-drink tea, bottled water and juice
beverages, is one of the leading beverage manufacturers in China.
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PepsiCo currently operates its China beverage business through 24 company-owned and joint venture
bottling operations. Upon approval of the transaction, PepsiCo will transfer its indirect equity
interests in the bottlers to TAB, and will
receive as consideration a 5 percent indirect equity interest in TAB. PepsiCo will also have an
option to increase its indirect equity interest in TAB to 20 percent by 2015, when China is
projected to become the worlds largest liquid refreshment beverage market.
The transaction is subject to regulatory approval in China and the approval of the shareholders of
Tingyi, which is a listed company on the Hong Kong Stock Exchange.
The shareholdings of PepsiCos existing Chinese joint venture partners in the joint venture
bottling operations will not change as a result of the transaction.
Under the new alliance, TAB will partner with PepsiCos current bottlers to manufacture, sell and
distribute PepsiCos carbonated soft drink and Gatorade brands. PepsiCo will retain branding and
marketing responsibilities for these products.
TAB also will begin co-branding its juice products under the Tropicana brand name under a license
from PepsiCo. TAB and PepsiCos current bottlers will have the sole rights to distribute PepsiCos
branded beverage products in China. In addition, PepsiCo will provide the alliance access to its
global beverage innovation pipeline.
Tingyis Chairman and CEO Wei Ing-Chou said, Ready to welcome a golden age of the Chinese beverage
industry amidst intense market competition, Tingyi and PepsiCo will continue building up the
capacity to seize market opportunities and satisfy consumers diversified demands with world-class
products.
To win globally, we need to have absolutely the best business partners locally, said PepsiCos
Chairman and CEO Indra K. Nooyi. Tingyi has a history of successful partnerships with other
companies, and we believe this proposed alliance will combine Tingyis superb distribution reach
with PepsiCos innovation prowess, significantly enhancing our beverage business in China in the
near term while maximizing PepsiCos future growth potential in the fastest growing beverage market
in the world. This is a positive deal for PepsiCo, Tingyi, our existing Chinese bottling partners
and consumers in China.
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Strategic Advantages
Upon approval, the strategic alliance is expected to be beneficial to the healthy development of
the highly competitive China beverage industry and enable TAB, PepsiCo and PepsiCos existing joint
venture partners to operate more effectively by capitalizing on their complementary strengths. In
addition, it is expected to bring a variety of important benefits, including:
| Bringing innovative new products to market faster across the PepsiCo and TAB product offerings and improving choice for consumers | ||
| Improving operating efficiency and reducing costs by combining local and global expertise in manufacturing and distribution | ||
| Providing better localized service to PepsiCos national retail and food service customers in China through TABs distribution expertise | ||
| Supporting new opportunities to develop local economies in interior and western China | ||
| Extending the national distribution of PepsiCos carbonated soft drink and non-carbonated beverage brands | ||
| Increasing the investment made in PepsiCo brands and marketing in China |
In China, while converting its beverage business to its globally prevalent franchise model, PepsiCo
will continue to independently operate its successful food business. PepsiCo enjoys success in the
snacks and cereal categories with its Lays Potato, Rice and Wheat Chips, Quaker Oats and Cheetos
brands, and will continue to invest in promoting sustainable agriculture, driving innovation and
expanding the distribution reach of its foods business across China.
Advisers
J.P. Morgan acted as exclusive financial adviser for Tingyi, and Sidley Austin acted as legal
adviser. UBS AG acted as exclusive financial adviser for PepsiCo, and Freshfields Bruckhaus
Deringer acted as legal adviser.
About Tingyi Holding
Tingyi Holding Corp. is Chinas leading food and beverage company that specializes in the
production and distribution of instant noodles, beverages and baked goods in the PRC. Tingyi
started its instant noodle segment in 1992 under the brand of Master Kong, and expanded
into the bakery segment and beverages in 1996. The philosophy of Tingyi is to provide consumers
with safe, tasty quality products with value for money. With sophisticated production
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processes, outstanding operation, innovative products and CSR campaigns, Tingyi is widely respected
in Chinas consumer industry. Continuous attention to operations at the community level in the past
20 years has made Master Kong one of the most recognized brands. The Company has also made big
contributions to rural, agricultural and farmers development. For three consecutive years from
2008 to 2010, Tingyi was named one of the 50 best listed companies in Asia by Forbes for its solid
financial track record and excellent management and entrepreneurial skills. As of 31 October 2011,
market capitalization of the Company was US$16.05 billion.
For more information, please visit www.masterkong.com.cn.
About PepsiCo
PepsiCo offers the worlds largest portfolio of billion-dollar food and beverage brands, including
19 different product lines that generate more than $1 billion in annual retail sales each. In
addition to PepsiCos main businesses; Quaker, Tropicana, Gatorade, Frito-Lay, and Pepsi-Cola,
PepsiCo also makes hundreds of other enjoyable foods and beverages that are respected household
names throughout the world. With net revenues of approximately $60 billion, PepsiCos people are
united by their unique commitment to sustainable growth by investing in a healthier future for
people and the planet, which PepsiCo believes also means a more successful future for PepsiCo.
PepsiCo calls this commitment Performance with Purpose: PepsiCos promise to provide a wide range
of foods and beverages for local tastes; to find innovative ways to minimize its impact on the
environment, including by conserving energy and water usage, and reducing packaging volume; to
provide a great workplace for its associates; and to respect, support and invest in the local
communities where PepsiCo operates.
For more information, please visit www.PepsiCo.com.
PepsiCo Cautionary Statement
Statements in this communication 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: changes in demand for PepsiCos products, as a result of changes in
consumer preferences and tastes or otherwise; damage to PepsiCos reputation; PepsiCos ability
to grow its business in developing and emerging markets or unstable political conditions, civil
unrest or other developments and risks in the countries where PepsiCo operates; trade
consolidation or the loss of any key customer; changes in the legal and regulatory environment;
PepsiCos ability to build and sustain proper information technology infrastructure,
successfully implement its ongoing business transformation
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initiative or outsource certain functions effectively; unfavorable economic conditions in the
countries in which PepsiCo operates; fluctuations in foreign exchange rates; PepsiCos ability
to compete effectively; increased costs, disruption of supply or shortages of raw materials and
other supplies; disruption of PepsiCos supply chain; climate change, or legal, regulatory or
market measures to address climate change; PepsiCos ability to hire or retain key employees or
a highly skilled and diverse workforce; failure to successfully renew collective bargaining
agreements or strikes or work stoppages; and failure to successfully complete or integrate
acquisitions and joint ventures into PepsiCos existing operations.
For additional information on these and other factors that could cause PepsiCos actual results
to materially differ from those set forth herein, please see PepsiCos filings with the United
States Securities and Exchange Commission, 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.
PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result
of new information, future events or otherwise.
Media Contacts:
Tingyi (Cayman Islands) Holding Corp.
Kungju Chen
Tel: +86 22 6620 3389
Email: Kungju_Chen@tinghsin.com.cn
Kungju Chen
Tel: +86 22 6620 3389
Email: Kungju_Chen@tinghsin.com.cn
PepsiCo (U.S.)
Jeff Dahncke
Tel: +1 917 763 0540
Email: jeff.dahncke@pepsico.com
Jeff Dahncke
Tel: +1 917 763 0540
Email: jeff.dahncke@pepsico.com
PepsiCo (Greater China Region)
Emma Fan
Tel: +86 10 65630086
Email: emma.fan@pepsico.com
Emma Fan
Tel: +86 10 65630086
Email: emma.fan@pepsico.com
Investor Contacts:
Tingyi (Cayman Islands) Holding Corp.
Debbie Ho
Tel: +852 2511 1911
Email: debbieho@tingyi.com
Debbie Ho
Tel: +852 2511 1911
Email: debbieho@tingyi.com
PepsiCo (U.S.)
Jamie Caulfield
Tel: +1 914 253 3035
Email: jamie.caulfield@pepsico.com
Jamie Caulfield
Tel: +1 914 253 3035
Email: jamie.caulfield@pepsico.com
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