PAI Partners acquires multiple PepsiCo brands in $3.3bn deal

Private equity firm PAI Partners has struck a deal worth approximately $3.3 billion with PepsiCo to take a controlling interest in drinks businesses such as Tropicana and Naked.

The brands form part of a new joint venture between PepsiCo and PAI Partners, which will also take ownership of other unnamed “select juice brands” from the PepsiCo portfolio, a joint statement from the companies said.

PAI Partners has taken a controlling 61 percent stake in the JV with PepsiCo owning the remaining 39 percent interest. PAI has also secured “an irrevocable option” to buy certain PepsiCo European beverage businesses, but the names of these companies were undisclosed.

A statement from PepsiCo said the Nasdaq-listed company retained “exclusive US distribution rights to the portfolio of brands in its best-in-class, chilled direct store delivery for small-format and foodservice channels.”

“These juice businesses delivered approximately $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo’s overall operating margin in 2020,” the statement added.

PepsiCo intends to use proceeds from the sale to strengthen its balance sheet and make capital investments into its existing portfolio of juice and drinks companies.

PAI Partners has a long track record of investing in food and beverage companies. In November 2020 the firm acquired a 60 percent stake in Euro Ethnic Foods, which is the grocery business of Gran Frais, a food retailer found in European countries such as France, Belgium and Luxembourg.

The French firm’s portfolio also includes UK chilled foods platform Addo Food Group and Winterbotham Darby, Spanish seafood provider Angulas Aguinaga and Refresco, one of the biggest global beverage bottlers.

“We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company,” said managing partner Frédéric Stévenin.

“We believe there is great growth potential to be realized 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.”

PAI Partners had $13.6 billion in assets under management as at December 2020.