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Pepsi completes spin-off
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October 7, 1997: 9:01 a.m. ET
Company will use $5.5B proceeds to pay down debt and repurchase stock
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NEW YORK (CNNfn) - PepsiCo, once a beverage, pre-packaged food and restaurant colossus, is a bit slimmer Tuesday and about $5.5 billion richer.
Tuesday marks the first full day after the company spun off its restaurant holdings that include the Pizza Hut, Kentucky Fried Chicken and Taco Bell chains into Tricon Global Restaurants Inc.
The company said it has raised $5.5 billion in cash from the move, $4.5 billion of which came Monday from Tricon. Other sources of cash included the sale of PFS, Pepsi's restaurant supply distribution unit, the sale of five smaller, non-core restaurant chains and an initial public offering of its New Zealand restaurants.
Pepsi said it will use $3.7 billion of the proceeds to pay off most of its short-term debt. The remainder will be used to repurchase stock. Pepsi said it plans to spend more than $2 billion on share repurchases this year and as much as $3 billion in 1998. It said it will continue paying the 12.5-cent per share quarterly dividend in effect before the spin-off.
Andrall Pearson, Tricon's chairman and chief executive officer, said the spin-off will allow Tricon chiefs to focus on the company's three restaurant brands while allowing PepsiCo managers to focus on packaged goods. (133K WAV) or (133K AIFF)
With the spin-off complete, Pepsi's holdings now include the Pepsi-Cola Co. and snack Goliath Frito-Lay Co. The two have annual revenue of about $20 billion.
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