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Pepsi mulls bottling spinoff
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July 24, 1998: 6:06 a.m. ET
Company studying possibility of taking portion of bottling business public
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NEW YORK (CNNfn) - Responding to investors' requests, PepsiCo Inc. said its board of directors has authorized the company to consider taking public a "significant portion" of its $7 billion bottling business.
Purchase, N.Y.-based PepsiCo said late Thursday the public company being considered would include essentially all of the bottling operations PepsiCo currently owns in North America and possibly some international bottling operations. PepsiCo said the new company would account for about half of its domestic case volume.
If PepsiCo takes its bottling business public, it would be the second bold move made by the soft-drink and snack giant to raise the stakes in its perennial battle with Coca-Cola Co. (KO).
On Monday, PepsiCo announced it was buying the Tropicana juice business from Seagram Co. Ltd. (VO) for $3.3 billion in cash. That deal puts Pepsi into direct competition with Coke's Minute Maid brands.
Bottling is a debt-heavy, capital-intensive business with smaller profit margins than selling concentrate. By shedding much of its bottling business, PepsiCo can erase some of its assets and debt.
"The creation of a closely aligned, separately managed bottler of this size would help us pursue consolidation opportunities and improve our performance in the marketplace," said Roger Enrico, PepsiCo chairman and chief executive officer.
PepsiCo (PEP) shares shed 1-15/16 to close at 37-9/16 in Thursday trading. 
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PepsiCo.
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