DOW JONES NEWSWIRES
Dr Pepper Snapple Group Inc. (DPS) will get $900 million for
licensing certain brands to PepsiCo Inc. (PEP) after the
soda-and-snacks giant completes its acquisition of its two biggest
bottlers early next year.
Meanwhile, Pepsi tempered its 2009 forecast, seeing revenue up
about 5% and per-share earnings up between 5% and 6%, both
excluding currency changes. The company had projected mid- to
high-single-digit growth for each. It reiterated its 2010
forecast.
The 20-year deal, which will replace an existing one with
PepsiAmericas Inc. (PAS) and Pepsi Bottling Group Inc. (PBG),
allows Pepsi to distribute Dr. Pepper, Crush and Schweppes sodas in
the U.S. The trio and other brands will be handled in Canada and
Squirt and Canada Dry will be distributed in Mexico.
Pepsi will have to meet certain undisclosed performance
conditions.
Meanwhile, Dr Pepper Snapple will begin selling some products
where it already has a distribution footprint and were previously
sold by the bottlers. They include Sunkist soda and Hawaiian
Punch.
President and Chief Executive Larry Young said the deal
"demonstrates the value and growth potential of these great brands
and strengthens our third-party route to market while benefiting
our own packaged-beverages business." PepsiCo Chairman and CEO
Indra Nooyi noted her company is "fully committed to vigorously
expand, flawlessly distribute and grow Dr Pepper Snapple's brands
in its appointed territories."
The one-time payment to Dr Pepper Snapple is expected to be
recognized during the estimated life of the licensing deal, the
company said. It added proceeds will be used to cut debt.
Shares of both companies were down fractionally in after-hours
trading.
-By Kevin Kingsbury; Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com