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Pepsi steps up juice share in Russia

PepsiCo, the world’s number two producer of soft drinks, has agreed to buy a majority stake in Lebedyansky, the leading producer of juices in Russia.

Under the terms of the deal, which should be concluded by the end of the year, PepsiCo will pay up to £1bn for a 76% stake in the  company.

Lebedyansky produces the Ya, Tonus and Fruktovy Sad juices and nectars, Frustyle juice drinks and Edo ice tea as well as a wide range of FrutoNyanya baby juices and purees. Every third pack of juice sold in the rapidly expanding Russian market is produced by Lebedyansky.

PepsiCo already has about 20% of the Russian soft drinks market but only has about 2% of the juice market through its Tropicana brand. Until the deal is completed it has no juice production facilities in Russia. PepsiCo's main rival, CocaCola, holds controls more than a fifth of the Russian juice market following its £260m purchase of Multon in 2005.
The news of the PepsiCo deal follows last week’s announcement that Lion Capital, the London-based private equity house, is buying PepsiCo's previous target, Russia's No. 3 fruit juice maker, Nidan Soki.
About 23% of Lebedyansky’s shares are freely floated, while 76% are controlled by a group of Russian businessmen, including a former director, Nikolay Bortsov, and his son, Yuri, the firm's chairman. The company is among Russia’s top 300 enterprises by value.

Ron Emler, 15/08/07

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