The Frito-Lay North America division of PepsiCo Inc. (PEP) has joined hands with Activision Publishing, Inc., a wholly owned subsidiary of Activision Blizzard, Inc. (ATVI) to promote Activision’s video game and toy brand, Skylanders Spyro's Adventure. The promotion began on April 2 and will last till May 5, 2012.
Cashing in on the popularity of the video game, Frito-Lay packs will provide the kids over the age of 13 with a unique code to get an exclusive online gaming experience and a free Skylanders action figure.
Only selected Frito-Lay packs such as Frito-Lay Multipack Classic Mix, Multipack Flavor Mix, or Multipack Adventure Mix packs will have a unique 8-digit alpha-numeric code, which needs to be redeemed online to get the exclusive online mini-game, Skylanders Spyro's Universe. They can also win prizes on redeeming the codes. The multipack Frito-Lay snacks will be available at selected retail stores.
The game has over 30 characters, and each character has specialized statistics in areas such as attack power, defense, and speed. This has given opportunity to PepsiCo’s Frito-Lay division to attract Activision’s video game fans to hunt for these characters in the Frito-Lay stores.
Last week, PepsiCo has received all necessary regulatory and shareholder approval to complete its strategic alliance with leading Chinese food and beverage maker, Tingyi Holding Corp. PepsiCo can now sell its 24 Chinese bottling operations to Tingyi by transferring its indirect equity interest in the bottlers to the latter.
In return, PepsiCo will be receiving a 5% equity interest in Tingyi’s beverage subsidiary, Tingyi-Asahi Beverages. In due course of time, PepsiCo has plans to increase its interest to 20% by 2015, when China is estimated to become the world’s largest liquid refreshment beverage market.
Our Recommendation
We currently have a Neutral recommendation on PepsiCo on a long-term basis. However, the stock carries a Zacks #4 Rank (short-term ‘Sell’ rating).
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