By Dhirendra Tripathi
Investing.com – PepsiCo (NASDAQ:PEP) stock was trading 1.1% higher in premarket Tuesday as the snacks food giant decided to sell Tropicana, Naked and other juice brands in North America and Europe to private-equity firm PAI Partners.
Pre-tax proceeds to PepsiCo from the sale are pegged at $3.3 billion.
PepsiCo will take a 39% stake in a new joint venture with PAI. It will retain exclusive distribution rights for small-format and foodservice channels in the U.S.
Consumers have been slowly shifting away from juices and high-sugar, high-calorie drinks in search for healthier alternatives, as obesity and diabetes remain big health concerns the world over.
PepsiCo has also been under pressure from shareholders to shore up its margins, which in the case of the juice business, have been than its overall margins.
The juice businesses delivered approximately $3 billion in net revenue in 2020, PepsiCo said.
The Frito Lay-maker had bought Tropicana from Seagram for $3.3 billion in 1998. Naked Juice was bought in 2006.
PepsiCo Chairman and CEO Ramon Laguarta said the deal frees the company to concentrate on healthier snacks, zero-calorie beverages, and products like SodaStream.
The company expects to use the proceeds to strengthen its balance sheet and make organic investments. The transaction is expected to close by early 2022.