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Top Pepsi bottlers to merge
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August 21, 2000: 9:10 a.m. ET
No. 2 and No. 3 bottlers unite as Whitman agrees to buy PepsiAmericas for $332M
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NEW YORK (CNNfn) - Whitman Corp., the second-largest U.S. Pepsi-Cola bottler, agreed Monday acquire the No. 3 Pepsi bottler, PepsiAmericas Inc., for about $331.7 million in stock, bolstering Whitman's Midwest and international operations.
The transaction, which includes the assumption of roughly $330 million in debt, will create a company with more than $3 billion in annual sales and a presence in 18 states and several overseas countries. It also secures Whitman's position as the No. 2 bottler of Pepsi, the world's second-largest soft drink maker. Pepsi Bottling Group (PBG: Research, Estimates), the No. 1 bottler, posted sales of $7.5 billion last year.
"Our playing field will get bigger with this transaction," said Bruce Chelberg, Whitman's chairman and chief executive officer. "We'll be serving a domestic market of about 45 million people and an international market, including the Caribbean, of more than 70 million people."
 Terms of the agreement call for Whitman (WH: Research, Estimates) to exchange $3.80 in cash for PepsiAmericas' 87.3 million shares outstanding.
That values the Minneapolis-based PepsiAmericas' (PAS: Research, Estimates) stock at a roughly 20 percent discount to its closing price of 4-3/4 Friday. The company's shares responded in turn Monday, losing 13/16 to 3-15/16 in late afternoon trading.
PepsiAmericas distributes Pepsi in four Midwestern states, four Southern states and the Caribbean, generating about $576 million revenue during 1999. The company's stock has rebounded slightly of late after falling to a new 52-week low of 2-11/16 this past Spring.
Whitman, based in Rolling Meadows, Ill., operates in 10 Midwestern states and four countries in central Europe, and had about $2.4 billion revenue in 1999.
PepsiCo Inc. -- which owns about a 40 percent stake in Whitman and a one-third stake in PepsiAmericas' majority shareholder, Dakota Holdings LLC -- hailed the deal, saying it would help improve synergies between Whitman and Pepsi's retail customers.
"We view this merger as great news," said Roger Enrico, PepsiCo's chairman and CEO. "In general, larger bottlers can operate more efficiently, compete more efficiently against other big bottlers and, most important, better serve the needs of our rapidly consolidating retail customers."
Enrico also endorsed a plan calling for PepsiAmericas Chairman and CEO Robert Pohlad to become Whitman's CEO following the completion of the merger, expected by year's end. Pohland, 46, would succeed Chelberg, who previously announced plans to retire.
"Aside from increasing their critical mass, we're filling a CEO void at Whitman and that's a post that's been up for grabs for a couple of years," said Caroline Levy, a beverage industry analyst at UBS Warburg.
Whitman shares climbed 3/8 to 14-1/8 Monday. 
-- Reuters contributed to this story.
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