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WBD
On February3, 2011, we acquired the ordinary shares, including
shares underlying ADSs and Global Depositary Shares (GDS),
ofWBD, a company incorporated in the Russian Federation,
which represented in the aggregate approximately 66% of WBD’s
outstanding ordinary shares, pursuant to the purchase agree-
ment dated December1, 2010 between PepsiCo and certain
selling shareholders of WBD for approximately $3.8billion in cash.
The acquisition of those shares increased our total ownership to
approximately 77%, giving us a controlling interest in WBD. Under
the guidance on accounting for business combinations, once a
controlling interest is obtained, we are required to recognize and
measure 100% of the identiable assets acquired, liabilities assumed
and noncontrolling interests at their full fair values.
The following table summarizes the fair value of identiable
assets acquired and liabilities assumed in the acquisition of WBD and
the resulting goodwill as of the acquisition date:
Fair value of total consideration transferred
Payment in cash, for the approximately 66% of outstanding
ordinary shares of WBD on February3, 2011, including shares
underlying ADSs and GDSs (or $2,428, net of cash and cash
equivalents acquired) $ 3,827
Fair value of our previously held equity interest in WBD prior to
the acquisition 644
Total $ 4,471
Acquisition date fair value of identifiable assets acquired
and liabilities assumed
Inventories $ 314
Property, plant and equipment 813
Amortizable intangible assets, primarily customer relationships 46
Nonamortizable intangible assets, primarily brands and
tradename 3,114
Other current assets and liabilities(a) 1,244
Debt obligations (1,114)
Other noncurrent assets and liabilities (31)
Deferred income taxes (665)
Total identiable net assets 3,721
Fair value of noncontrolling interest in WBD (1,349)
Goodwill 2,099
Total $ 4,471
(a) Includes cash and cash equivalents, accounts receivable, prepaid expenses and other
current assets, accounts payable and other current liabilities.
Goodwill is calculated as the excess of the aggregate of the fair
value of the consideration transferred, any noncontrolling interest
and any previously held equity interest in the acquiree over the fair
value of the net assets recognized. The goodwill recorded as part of
the acquisition of WBD primarily reects the value of adding econo-
mies of scale from our existing manufacturing and procurement
operations in Russia and synergies expected to arise from our com-
bined brand portfolios in the nutrition and other categories, as well
as any intangible assets that do not qualify for separate recognition.
Goodwill is not amortizable or deductible for tax purposes. All of
thegoodwill is recorded in our Europe segment.
Under the guidance on accounting for business combinations,
merger and integration costs are not included as components of
consideration transferred but are accounted for as expenses in the
period in which the costs are incurred. See Note 3 for details on the
expenses incurred during 2011 and 2010.
On March10, 2011, we commenced our tender oers in
Russiaand the U.S. for all remaining outstanding ordinary shares
and ADSs of WBD for 3,883.70 Russian rubles per ordinary share and
970.925Russian rubles per ADS, respectively. The Russian oer was
made to all holders of ordinary shares and the U.S. oer was made to
all holders of ADSs. We completed the Russian oer on May19, 2011
and the U.S. oer on May16, 2011. After completion of the oers, we
paid approximately $1.3billion for WBD’s ordinary shares (including
shares underlying ADSs) and increased our total ownership of WBD
to approximately 98.6%.
On June30, 2011, we elected to exercise our squeeze- out rights
under Russian law with respect to all remaining WBD ordinary
shares not already owned by us. Therefore, under Russian law, all
remaining WBD shareholders were required to sell their ordinary
shares (including those underlying ADSs) to us at the same price
that was oered to WBD shareholders in the Russian tender oer.
Accordingly, all registered holders of ordinary shares on August15,
2011 (including the ADS depositary) received 3,883.70 Russian
rubles per ordinary share. After completion of the squeeze- out in
September 2011 (during our fourth quarter), we paid approximately
$79million for WBD’s ordinary shares (including shares underlying
ADSs) and increased our total ownership to 100% of WBD.
PepsiCo, Inc.  Annual Report

Notes to Consolidated Financial Statements