Glenboden M & A Originations

Pepsico acquisition of Sandora confirms its surge into mainstream fruit juice in Europe

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Origination Status company acquisition agreement announced, June 2007;
Asset Sandora LLC (Ukraine), no.1 domestic fruit juice producer;
Buyer Pepsico and PepsiAmericas Inc (USA), multinational food group;
Seller private owners of Sandora;
Buyer Rationale expansion of portfolio beyond CSDs in Europe;
Seller Rationale attractive valuation through competitive tender process;
NBs Pepsico beat Coca-Cola in tender to acquire Sandora.
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This is a very interesting deal, because Sandora is clearly a commodity juice producer. Pepsico and Coca-Cola have both made acquisitions of fruit juice and nectar players in Europe, in the last year or two, with Pepsi buying Germany’s Punica and Coke buying Russia’s Multon and Serbia’s Fresh & Co. However, both of their overall shares in 100% juices and nectars, in Europe, are still very small, and those categories are still dominated by national players that most of us haven’t heard of. So, if this pattern is a strategic one, then we can expect many more mainstream fruit juice deals, from these two groups, in the coming years.

Ukraine is a fast-growing soft drinks market, with a large population, and Sandora has nearly 50% share of the juice market there. Compelling rationale indeed for Pepsico, even if the product range is short on added-value so far.

The group cited this deal as a continuation of its expansion strategy in the region, following its acquisition of a major bottler in Romania last year, Quadrant. Expect to see more deals of this kind by Pepsico, in both developing and developed Europe, given the obvious health advantages of juices and nectars over CSDs, the fast growth rates in these categories, and the enormous innovation and added-value potential that they offer.

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Size (€ mln) 420
Sector fruit juice
Asset Quality Ukraine no.1 branded
Seller individuals
Buyer large plc
P/S 3,4
P/Ebitda n/a
Type equity value
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