PepsiCo and the Pepsi Bottling Group (PBG) are to jointly acquire a 75.5% stake in the Lebedyansky juice company, which has an estimated market share of around 30%, for $1.4 billion, Pepsi said on its website on Thursday.
The deal, which could be completed before the end of 2008, will make Pepsi - the world's second largest beverage producer - the leading juice maker in Russia, Kommersant said.
The market share of Pepsi's Tropicana juice brand was 1.9%, Coca-Cola's Multon juices accounted for 21.1%, and Lebedyansky juices for 30.6% of the Russian market in 2007. The market was worth an estimated $3 billion overall, according to statistical data cited by the business daily.
"Coca-Cola will not be satisfied with the No. 2 position on the market," Andrei Yanovsky, general director of Nidan Soki juice company told the daily.
Further backing up its claim, the paper said Coca-Cola had also ordered a monthly monitoring of Wimm-Bill-Dann's juice sales. A source in the food producer also told the daily that talks on the sale of the juice business had intensified recently.
"Of Wimm-Bill-Dann's three juice factories, of interest for Coca-Cola are those based in Ramenskoye, near Moscow, and the J7 brand, which is not in competition with any Multon juices," a source said, as quoted by Kommersant.
However, the chairman of the Wimm-Bill-Dann board of directors, David Yakobashvili, said on Wednesday that "Coca-Cola executives have not approached him with any proposal." Coca-Cola has refused to comment on the possibility of the deal.
"Such a deal would leave the two multinational companies in control of the Russian beverage market," Salford equity fund chief Yevgeny Yoffe commented, according to Kommersant.