The Joy of Lizards

Pepsi Agrees to Buy SoBe for $370 Mil.

Pepsi inks $370 mil deal to buy SoBe, owned by Norwalk, Connecticut-based South Beach Beverage Co. Until last week, proposed acquisition of SoBe by J.W. Childs Boston banking firm -- with Coke taking 20% stake -- seemed to be progressing. But deal had dragged on for months. Childs-SoBe letter of intent was signed in April. Sources say Childs' "no-shop" agreement -- providing exclusive negotiating period -- with SoBe ended Sept. 30, so SoBe was free to talk with others. SoBe CEO John Bello says Pepsi entered into talks on Oct. 13 after Childs-Coke deal got "convoluted and complicated." Calls deal with Pepsi "perfect fit." Adds it gives SoBe access to Pepsi system in some places and more "leverage" with existing SoBe distributors. Childs-SoBe deal was valued SoBe at about $280 mil.

Views. Pepsi bottlers: 1) "I love the deal. It's an instant entry into the new age category. It's great to see Pepsi pre-empt Coke, though there will be some operational issues." 2) "It's an aggressive move by Pepsi ... Just by putting SoBe into the Pepsi system it will grow." Wall Street. ING Barings' Manny Goldman: "This fills Pepsi's vacuum. The vacuum was the hot-fill juices, and it's an important sector." Morgan Stanley Dean Witter's Andrew Conway: "It gives Pepsi a core anchor brand in the fast-growing functional non-carb arena." "

More. Beverage Digest's special issue includes interviews with Pepsi-Cola North America President Gary Rodkin and SoBe CEO John Bello as well as details about SoBe's distribution network, historic volume, standing in the non-carb business and company history.

Call (914) 244-0700 to order a copy of this issue.