PAI buys PepsiCo US juice brands for USD 3.3bn

Greg Gille
04 August 2021

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PepsiCo has entered into agreements to sell Tropicana, Naked Juice and other select juice brands across North America to PAI Partners for USD 3.3bn.

The deal also includes an irrevocable option to sell certain juice businesses in Europe, and will see PepsiCo retain a 39% non-controlling interest in a newly formed JV. The transaction is expected to close in late 2021 or early 2022.

PAI will be the majority shareholder of the transferred business, with PepsiCo retaining exclusive US distribution rights to the portfolio of brands.

The juice businesses delivered approximately USD 3bnin net revenue in 2020, although PepsiCo noted that operating profit margins were below its overall operating margin that year.

Centerview Partners is acting as financial adviser to PepsiCo. Gibson Dunn & Crutcher is acting as lead counsel to PepsiCo, with Davis Polk & Wardwell as US tax and antitrust counsel. JP Morgan Securities is acting as financial adviser to PAI, with Willkie Farr & Gallagher serving as legal counsel to the GP. Latham & Watkins is acting as financing counsel.

PAI is no stranger to the food and beverage sector, having notably entered a similar JV with Nestlé in connection with its ownership of ice-cream maker Froneri. PAI merged R&R Ice Cream with several Nestlé ice cream and frozen foods businesses in 2016, creating the Froneri platform that went on to make a number of acquisitions including New Zealand-based Tip Top in a $380m transaction from dairy co-operative Fonterra, and Israel-based Noga from Osem Group. In 2019, Froneri acquired Nestlé's US ice cream business for USD 4bn.

Froneri was one of the two assets that PAI transferred from its fifth fund to a new vehicle that is roughly EUR 2bn in size, realising liquidity for the firm and some of its LPs, in late 2019.

PAI also holds Dutch drinks producer Refresco, having acquired the business with an offer that valued the then-Euronext Amsterdam-listed company at an EV of EUR 2.2bn in October 2017. The GP is getting ready to exit Refresco less than four years after the take-private, as reported. PAI is exploring options around a dual-track process that could see the EUR 514m-EBITDA business listed on the stock exchange or sold; a process is only likely to launch in the final months of this year.