(PEP) Pepsico Sheds Malaysian Bottler

Pepsico Inc. (PEP) the global food and Drinks Corporation, is reported to be in talks with Asahi Group Holdings Ltd., Japan’s biggest beer maker for selling its Malaysian bottler, Permanis Sdn.

Based in Tokyo, Asahi Breweries has a 40% share of the Japanese beer market. In 1990, Asahi acquired a 19.9% stake in Australian brewery giant- Elders IXL. Again in 2009, Asahi acquired the Australian beverages unit of Cadbury Schweppes. On January 23, 2009, Asahi acquired 19.9% of Tsingtao Brewery from Anheuser-Busch InBev for $667 million. The sale made Asahi Breweries Ltd, the second largest shareholder in Tsingtao behind the Tsingtao Brewery Group.

Following Japan’s earthquake, the industries have been facing frequent production and power-supply disruptions. The country’s beverage makers are looking beyond Japan for alternate markets to combat the shrinking domestic demand for their products.

Asahi is seeking to achieve its goal of becoming one of the world’s top 10 food and beverage companies by focusing overseas. It has agreed to go ahead with two separate soft drinks M&A deals in Australia and New Zealand worth a total of $309 million, as part of the firm’s drive to expand its global reach.

Permanis is a wholly-owned subsidiary of CI Holdings Bhd (CIH) and the official bottler, maker and distributor of PepsiCo brands in Malaysia.

In July 2010, PepsiCo extended the rights of CIH’s wholly-owned subsidiary- Permanis for manufacturing and selling its beverage brands in Malaysia to 10 years until June 30, 2020. PepsiCo and C.I. Holdings said in a joint statement that the two parties had signed an exclusive bottling agreement to renew the franchise bottling rights of Permanis.

In three years Pepsi and Permanis together had introduced three new PepsiCo brands namely, Tropicana Twister, 7-Up Revive and Mountain Dew to the Malaysian market, all of which were eventually received well by the Malaysian beverage consumers.

Pepsico holds a Zacks #3 Rank, translating into a short-term ‘Hold’ rating.

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