The world’s leading food and beverage retailer Pepsico Inc. (PEP) has acquired Brazilian cookie company Grupo Mabel, for an undisclosed price. However, according to Bloomberg, sources with knowledge of the deal said that the retail giant would pay $450 million for the acquisition.
Based in Aparecida de Goiania, Goias, Mabel is 40% owned by the private-equity fund Icatu and operates through five plants. It is well distributed across Brazil in the states of Goias, Mato Grosso do Sul, Rio de Janeiro, Sergipe and Santa Catarina, and manufactures more than 200 products.
The takeover will bring brands like Mabel, Elbi's, Kelly and Skiny into Pepsi’s portfolio of snacks. Pepsi already offers snacks under brands like Elma Chips, Quaker, Toddy Chocolate Powder and Toddynho Chocolate Milk in Brazil.
Pepsi outdid global food processor Bunge Ltd and Mexican bread maker Bimbo’s bid of $460 million and $517 million, respectively, to win over the acquisition rights of the snack maker.
Brazil's cookie and cracker market posted robust sales in 2010, and PepsiCo looks to cash in on this opportunity. The company revealed plans to expand its presence in the center-west and northeastern regions of Brazil, where growth in middle-class consumer spending is robust. In 2007, the retail giant had also acquired a local snacks company in Brazil, called Lucky.
The acquisition of Mabel is a part of the company’s strategy to push deeper into the emerging markets. To move closer to the above mentioned strategy, the company had acquired Wimm-Bill-Dann Foods OJSC for $5.4 billion in September, 2011. Upon completion of the deal, the global soft drinks and beverage giant owns the largest food-and-beverage business in Russia.
Again, as a part of its strategy to spread across China, Pepsi decided to team up with Tianjin-based Taiwanese beverage company, Tingyi Holding, and sold its Chinese bottling operations to the latter.
Both Coca Cola Company (KO) and Pepsi reported higher-than-expected sales in the recently ended quarter, as strong sales in emerging markets helped blunt the impact of ongoing weakness at home.
Currently, we prefer to be Neutral on Pepsi’s stock. Furthermore, Pepsi holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.
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