PepsiCo announced Tuesday that it has agreed to sell major brands Tropicana, Naked and other juice brands across North America and Europe to private equity firm PAI Partners for approximately $3.3 billion, along with a 39 percent controlling stake in a new joint venture.
PAI, which the two companies say has strong experience in the food and beverage space, will be the majority shareholder of the transferred business, with PepsiCo retaining exclusive U.S. distribution rights to the portfolio of brands in its chilled Direct Store Delivery for small-format and foodservice channels.
"This joint venture with PAI enables us to realize significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands," PepsiCo Chairman and CEO Ramon Laguarta said. "In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet."
PepsiCo said those juice brands generated about $3 billion in 2020 net revenue, with operating margins that were lower than the company's overall operating margin. PepsiCo plans to use the sale proceeds to boost its balance sheet and make organic business investments.
The deal is expected to close in late 2021 or early 2022, subject to conditions and regulatory approvals.
"We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company," said Frédéric Stévenin, a Managing Partner at PAI. "We believe there is great growth potential to be realized through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories. We are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands."