PepsiCo (PEP) and Calbee Foods Form Strategic Alliance to Produce and Sell Foods in Japan

June 24, 2009 7:51 AM EDT

PepsiCo (NYSE: PEP) announced today that it will form a strategic alliance with Calbee Foods Company to jointly produce and sell a wide range of food products in Japan, such as potato chips, vegetable snacks, breakfast cereal and prawn crackers.

The agreement was approved today by shareholders of Calbee, Japan's largest snack company. Under the agreement, PepsiCo will contribute its Frito-Lay Japan business plus an undisclosed amount of cash to Calbee. Calbee in turn will issue new stock to PepsiCo, which will result in PepsiCo owning 20 percent of the expanded company and having a seat on the Calbee board of directors. Together, the businesses currently generate annual revenues of approximately $1.4 billion. The strategic alliance is subject to approval of Japanese government authority.

Calbee and PepsiCo are highly complementary companies whose alliance is expected to provide a variety of strategic benefits to support their continued growth in Japan, including:

• Leadership in major snack categories, including potato snacks and prawn crackers (Calbee) and corn snacks (PepsiCo)
  
• World-class research and development capabilities, including Calbee's extensive research and development center and PepsiCo's global snack innovation resources
  
• A sales and distribution system capable of reaching consumers across Japan
  
• A 13-plant manufacturing network
  
• Increased scale for more efficient procurement of raw materials and other goods and services

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