Pepsi Bottlers win preliminary class-action suit approval
Pepsi Bottling Group Inc. and PepsiAmericas Inc. won preliminary approval to settle a class- action lawsuit filed by investors challenging a buyout bid by PepsiCo Inc., the world's largest snack maker.
PepsiCo, based in Purchase, New York, made offers for the remaining shares in its two largest bottlers in April. Six pension funds sued, seeking more money in the $7.8 billion deal, which may close next year. They agreed to settle the case, in part, for $7.75 million in legal fees, court papers show.
Locally, PepsiCo has operations in Chicago and Barrington.
Delaware Chancery Court Judge Leo Strine Jr. said in a ruling yesterday that he will consider whether the settlement is "fair, reasonable, adequate and in the best interests" of the bottlers' stockholders at an April 12 hearing.
Revenue for PepsiCo may rise with the consolidation of bottlers and sales growth, according to a Nov. 30 report in Barron's, the weekly newspaper. PepsiCo logged $43.2 billion in sales for 2008, about $4 billion more than the previous year.
Under the buyout agreement, PepsiCo will pay $36.50 a share for Pepsi Bottling and $28.50 a share for PepsiAmericas Inc., half in cash and half in stock, based on the July 31 closing price of PepsiCo.
"It's premature to comment because we have not yet officially settled" pending court approval, said Dave DeCecco, a PepsiCo spokesman, in an e-mailed statement.
Mary Viola, a PepsiAmericas spokeswoman in Minneapolis, didn't immediately return voice or e-mail messages seeking comment on settlement.
Breakup Fee
In exchange for the settlement, the companies agreed to allow shareholders' lawyers to review additional information about the buyout, according to a Nov. 25 court filing. They also will reduce the potential Pepsi Bottling breakup fee to $115 million from $165.3 million and cut the PepsiAmericas breakup fee to $50 million from $71.6 million.
PepsiCo fell 89 cents to $62.76 in New York Stock Exchange composite trading at 6:40 p.m. Pepsi Bottling dropped 28 cents to $38.19 and Minneapolis-based PepsiAmericas declined 29 cents to $29.85.
The consolidated cases are In re: The Pepsi Bottling Group Inc. Shareholders Litigation, CA4526, and In re: PepsiAmericas Inc. Shareholders litigation, CA 4530, Delaware Chancery Court (Wilmington.)