PepsiCo announces Dr Pepper distribution deal, to take effect after buyouts of Pepsi bottlers

PepsiCo announces Dr Pepper distribution deal

PURCHASE, N.Y. — PepsiCo Inc., the world’s second-biggest soft drink maker, said Tuesday it has reached a deal to make and distribute Dr Pepper and other drinks after it completes its buyout of its two biggest bottlers.

Dr Pepper Snapple Group Inc. had deals with the two bottlers, and PepsiCo’s latest deal would replace those once the acquisitions close. The deal is contingent on the buyouts going through.

PepsiCo said it will distribute Dr Pepper, Crush and Schweppes brands in the U.S., as well as several brands in Canada and Mexico. Dr Pepper Snapple said it would start selling some of its brands that the bottlers sold in the U.S., such as Sunkist, Squirt, Vernors and Hawaiian Punch.

Dr Pepper Snapple Group said it would receive a one-time payment of $900 million from PepsiCo as part of the distribution deal. The payment will be recorded as sales over the life of the licensing deal, which has an initial 20-year term and is renewable.

PepsiCo expects to close the bottler buyouts this month or early next year. It has proposed buying the shares it does not already own of the Pepsi Bottling Group Inc. and PepsiAmericas Inc.

It said it in November that it withdrew paperwork related to the acquisitions to give regulators more time but that it still expected to close by early next year.

In addition to being the No. 2 soft drink maker behind Coca-Cola Co., PepsiCo owns the Frito-Lay snack business and brands such as Quaker, Tropicana and Gatorade.

Shares of PepsiCo, based in Purchase, N.Y., fell 75 cents to $63.48 on Tuesday. Dr Pepper Snapple shares rose 95 cents, or 3.5 percent, to $27.70 in after-hours trading Tuesday after closing at $26.75, down 19 cents from a day earlier.

Dr Pepper Snapple is based in Plano, Texas.