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86 PepsiCo, Inc. 2009 Annual Report
Notes to Consolidated Financial Statements
Note 15 Acquisition of Common Stock of
PBG and PAS
On August 3, 2009, we entered into the PBG Merger Agreement
and the PAS Merger Agreement.
The PBG Merger Agreement provides that, upon the terms and
subject to the conditions set forth in the PBG Merger Agreement,
PBG will be merged with and into Metro (the PBG Merger), with
Metro continuing as the surviving corporation and our wholly
owned subsidiary. At the effective time of the PBG Merger, each
share of PBG common stock outstanding immediately prior to
the effective time not held by us or any of our subsidiaries will
be converted into the right to receive either 0.6432 of a share of
PepsiCo common stock or, at the election of the holder, $36.50
in cash, without interest, and in each case subject to proration
procedures which provide that we will pay cash for a number of
shares equal to 50% of the PBG common stock outstanding
immediately prior to the effective time of the PBG Merger not
held by us or any of our subsidiaries and issue shares of PepsiCo
common stock for the remaining 50% of such shares. Each share
of PBG common stock held by PBG as treasury stock, held by us or
held by Metro, and each share of PBG Class B common stock held
by us or Metro, in each case immediately prior to the effective time
of the PBG Merger, will be canceled, and no payment will be made
with respect thereto. Each share of PBG common stock and PBG
Class B common stock owned by any subsidiary of ours other than
Metro immediately prior to the effective time of the PBG Merger
will automatically be converted into the right to receive 0.6432 of
a share of PepsiCo common stock.
The PAS Merger Agreement provides that, upon the terms and
subject to the conditions set forth in the PAS Merger Agreement,
PAS will be merged with and into Metro (the PAS Merger, and
together with the PBG Merger, the Mergers), with Metro continuing
as the surviving corporation and our wholly owned subsidiary. At
the effective time of the PAS Merger, each share of PAS common
stock outstanding immediately prior to the effective time not held
by us or any of our subsidiaries will be converted into the right to
receive either 0.5022 of a share of PepsiCo common stock or, at the
election of the holder, $28.50 in cash, without interest, and in each
case subject to proration procedures which provide that we will
pay cash for a number of shares equal to 50% of the PAS common
stock outstanding immediately prior to the effective time of the
PAS Merger not held by us or any of our subsidiaries and issue shares
of PepsiCo common stock for the remaining 50% of such shares.
Each share of PAS common stock held by PAS as treasury stock,
held by us or held by Metro, in each case, immediately prior to the
effective time of the PAS Merger, will be canceled, and no payment
will be made with respect thereto. Each share of PAS common stock
owned by any subsidiary of ours other than Metro immediately
prior to the effective time of the PAS Merger will automatically be
converted into the right to receive 0.5022 of a share of PepsiCo
common stock.
On February 17, 2010, the stockholders of PBG and PAS
approved the PBG and PAS Mergers, respectively. Consummation
of each of the Mergers is subject to various conditions, including
the absence of legal prohibitions and the receipt of regulatory
approvals. On February 17, 2010, we announced that we had refiled
under the HSR Act with respect to the Mergers and signed a
Consent Decree proposed by the Staff of the FTC providing for
the maintenance of the confidentiality of certain information we
will obtain from DPSG in connection with the manufacture and
distribution of certain DPSG products after the Mergers are
completed. The Consent Decree is subject to review and approval
by the Commissioners of the FTC. We hope to consummate the
Mergers by the end of February, 2010.
We currently plan that at the closing of the Mergers we will
form a new operating unit. This new operating unit will comprise
all current PBG and PAS operations in the United States, Canada
and Mexico, and will account for about three-quarters of the
volume of PepsiCo’s North American bottling system, with
independent franchisees accounting for most of the rest. This
new operating unit will be included within the PAB business unit.
Current PBG and PAS operations in Europe, including Russia, will be
managed by the Europe division when the Mergers are completed.
88045_pepsico-09ar_64-86_R1.indd 86 2/24/10 5:09 PM