PepsiCo To Sell Bottling Unit

PepsiCo Inc. will gain $1 billion from the planned sale of a majority stake in its bottling operations to the public. PepsiCo disclosed the amount of the initial public offering for Pepsi Bottling Group Inc. in a regulatory filing Friday, but did not indicate how big of a stake in the bottling operations it would retain.

PepsiCo, the No. 2 soft drink company behind Coca-Cola Co., announced plans for the sale two months ago and plans to use proceeds from the offering to pay off debt. The filing did not indicate how many shares would be offered or when the sale would take place.

The bottling group handles 54% of the North American sales of such products as Pepsi, Diet Pepsi, Mountain Dew, Lipton iced tea and Aquafina bottled water. It handles 32% of PepsiCo's worldwide beverage sales. The sale allows PepsiCo to focus on marketing and developing soft drinks while continuing the very profitable practice of selling soft drink concentrate to the bottlers. Bottlers mix the concentrate with carbonated water, package it and distribute the drinks, but generally have lower profit margins.

According to the filing, Pepsi Bottling Group's earnings rose steadily from 1995 to 1997, but fell 36% to $70 million through the first nine months of fiscal 1998. Nine-month sales were up 7% to $4.99 billion. In addition to beverages, PepsiCo owns Frito-Lay Inc., the nation's biggest snack food maker.