PepsiCo Inc is to sell its controlling stake in Tropicana, Naked and other juice brands in North America to private equity firm PAI Partners for $3.3 billion (€2.78 billion), the beverage giant said in a statement.
The sale will allow PepsiCo to concentrate on growing its portfolio of health-focused snacks and zero-calorie beverages, chief executive officer Ramon Laguarta said.
The company will retain a 39% stake in the new joint venture and have exclusive US distribution rights for the brands.
Laguarta added, "This joint venture with PAI enables us to realise significant upfront value, whilst providing the focus and resources necessary to drive additional long-term growth for these beloved brands."
For PepsiCo, Centerview Partners LLC is acting as financial advisor, Gibson, Dunn & Crutcher LLP as lead counsel, and Davis Polk & Wardwell LLP as US tax and antitrust counsel.
J.P. Morgan Securities LLC is acting as financial advisor to PAI, while Willkie Farr & Gallagher LLP is serving as legal counsel and Latham & Watkins LLP as financing counsel.
'Great Growth Potential'
Commenting on the move, Frédéric Stévenin, a managing partner at PAI, said, "We believe there is great growth potential to be realised through investments in product innovation, expansion into adjacent categories, and enhanced scale in branded juice drinks and other chilled categories.
"We are also thrilled that PepsiCo will remain involved as our partner in the joint venture as we execute our plans to drive the future success of these brands."
PepsiCo bought Tropicana, one of the world's most recognised juice brands in 1998 for roughly $3.3 billion and premium juice maker Naked Juice nearly a decade later for $150 million.
The juice businesses made about $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo's overall operating margins, the company said.
The company also plans to reduce the sugar content of its popular beverages in Europe by a quarter by the mid-part of the decade, as well as unveil a wider range of healthier, nutritious drinks and snacks.