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PepsiCo preps for spin-off?
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September 25, 1998: 9:01 a.m. ET
Soft-drink giant names top exec to bottling unit, spin-off may be pending
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NEW YORK (CNNfn) - As part of a massive restructuring, PepsiCo Inc. said Friday it will divide its North American operations into two separate companies, naming two heavy-hitting Pepsi executives to head the new units.
The plan, which makes it easier for PepsiCo to spin-off its less lucrative bottling division, will separate the company's bottling and concentrate divisions.
Craig Weatherup, chairman and chief executive officer of Pepsi-Cola Co., will lead the newly created Pepsi Bottling Group. Philip Marineau, president and chief executive officer for Pepsi-Cola North America will head the marketing-focused concentrate division. The division will retain the Pepsi-Cola North America name.
Both will report to parent company PepsiCo Inc.'s Chairman and Chief Executive Roger Enrico.
"Our goal is to make the Pepsi-Cola system a lot more competitive and a lot more responsive to our customers," Enrico said. "This new structure will move us closer to that goal by taking greater advantage of our excellent leaders and creating units that will be sharply focused on their respective businesses."
In July, and in response to shareholder requests, PepsiCo said its board of directors authorized the company to consider taking a "significant portion" of its $7 billion bottling business public.
Bottling is a debt-heavy and capital-intensive business with smaller profit margins than selling concentrate.
Enrico has previously told Wall Street analysts that creating a "closely aligned, separately managed bottler of this size would help us pursue consolidation opportunities and improve our performance in the marketplace."
Taking its bottling business public would be the latest in a serious of bold moves made by the soft-drink and snack company to raise the stakes in its battle with market leader Coca-Cola Co. (KO).
Also in July, PepsiCo Inc. agreed to buy the Tropicana Products Ltd. unit from Seagram Co. Ltd. for $3.3 billion in cash.
The deal unites the world's second-largest beverage company with the largest producer of branded juices.
Shares of PepsiCo (PEP) closed up 3/8 at 31 Thursday on the New York Stock Exchange.
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PepsiCo
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