PepsiCo, Purchase, N.Y., reached an agreement with Dr Pepper Snapple Group Inc. (DPS), Plano, Texas, to manufacture and distribute certain DPS products. The agreement will begin following the completion of PepsiCo’s acquisition of its two anchor bottlers, The Pepsi Bottling Group, Somers, N.Y., and PepsiAmericas Inc., Minneapolis. The acquisition is expected to close by the end of the first quarter of 2010, the company said.
PepsiCo will be entitled to manufacture and distribute Dr Pepper and certain other DPS products in the territories where the brands currently are distributed by Pepsi Bottling Group and PepsiAmericas in exchange for an upfront payment of $900 million payable upon closing of the acquisitions.
“We are delighted that we have reached a mutually beneficial agreement with Dr Pepper Snapple Group to continue to distribute their products,” said Indra K. Nooyi, PepsiCo’s chairman and chief executive officer, in a statement. “PepsiCo is fully committed to vigorously expand, flawlessly distribute and grow Dr Pepper Snapple’s brands in its appointed territories.”
Under the agreement, PepsiCo will distribute Dr Pepper, Crush and Schweppes brands in the United States; Dr Pepper, Crush, Schweppes, Vernors and Sussex brands in Canada; and Squirt and Canada Dry in Mexico.
The agreement between PepsiCo and DPS will have an initial term of 20 years, with automatic 20-year approval renewals thereafter, and will replace any existing agreements the bottling companies have with DPS.