PURCHASE, N.Y. and AUSTIN, Texas - PepsiCo, Inc. (NASDAQ: NASDAQ:PEP) announced today it has entered into a definitive agreement to acquire Siete Family Foods, a Mexican-American food company, for $1.2 billion. The acquisition is set to enhance PepsiCo's portfolio by adding Siete's range of heritage-inspired products, which include tortillas, salsas, and snacks, among others.
The deal, expected to close in the first half of 2025, is subject to customary closing conditions, including regulatory approvals. The terms of the acquisition have not been publicly disclosed.
Siete Family Foods, founded in 2014, is known for its grain-free and gluten-free food products that cater to various dietary needs. The company's offerings are available in over 40,000 retailers across the United States.
Ramon Laguarta, Chairman and CEO of PepsiCo, expressed admiration for the brand built by the Garza family, highlighting the shared passion for food between the two companies. He noted PepsiCo's intention to continue the legacy of Siete and expand the brand's reach.
Miguel Garza, CEO and Co-Founder of Siete Foods, commented on the decade-long journey of the company and its new chapter with PepsiCo, expressing hope that the acquisition will serve as an inspiration for other Latino businesses.
PepsiCo, with a diverse portfolio that includes brands like Lay's, Doritos, and Gatorade, generated over $91 billion in net revenue in 2023. The company aims to be the global leader in beverages and convenient foods and has initiated pep+, a strategic transformation focusing on sustainability and human capital.
The financial advisors for the transaction include Centerview Partners LLC and Citi for PepsiCo, and Lazard (NYSE:LAZ) for Siete. Legal advisors are Gibson Dunn & Crutcher LLP for PepsiCo, and Weil, Gotshal & Manges LLP, along with Armbrust & Brown, PLLC for Siete.
The acquisition is part of PepsiCo's strategy to diversify its product offerings and invest in brands that align with consumer trends towards healthier and more inclusive food options. This information is based on a press release statement from PepsiCo.
In other recent news, PepsiCo is reportedly in late-stage negotiations to acquire Siete Family Foods, a deal valued at over $1 billion. This acquisition aligns with PepsiCo's strategy to diversify its product offerings and expand in the health and wellness sector. Meanwhile, BofA Securities and Goldman Sachs have both adjusted their outlooks on PepsiCo shares, lowering price targets amid concerns about the company's North American performance.
PepsiCo has also amended its bylaws to comply with recent U.S. Securities and Exchange Commission regulations, including the adoption of the "universal proxy card" rules. The company has seen a transition in the CFO position and is increasing its focus on India, a rapidly expanding market. BNP Paribas (OTC:BNPQY) Exane has maintained a neutral rating on PepsiCo despite the departure of Deputy CFO, Jim Lee.
Finally, PepsiCo has issued Senior Notes totaling $2.25 billion for general corporate purposes and boosted its quarterly dividend by 7% to $1.35 per share. These are among the recent developments for the global food and beverage giant.
InvestingPro Insights
PepsiCo's acquisition of Siete Family Foods aligns with its strategy to diversify and expand its product portfolio, particularly in the healthier food segment. This move is supported by PepsiCo's strong financial position, as evidenced by recent InvestingPro data.
According to InvestingPro, PepsiCo boasts a market capitalization of $233.58 billion, underlining its position as a major player in the beverage and food industry. The company's revenue for the last twelve months as of Q2 2024 stood at an impressive $92.05 billion, with a gross profit of $50.3 billion. These figures demonstrate PepsiCo's financial strength to support strategic acquisitions like Siete Family Foods.
An InvestingPro Tip highlights that PepsiCo has raised its dividend for 51 consecutive years, showcasing its commitment to shareholder returns. This consistent dividend growth, coupled with a current dividend yield of 3.19%, may appeal to income-focused investors.
Another relevant InvestingPro Tip notes that PepsiCo operates with a moderate level of debt, which suggests the company has the financial flexibility to pursue acquisitions without overstretching its balance sheet.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for PepsiCo, providing a deeper understanding of the company's financial health and market position.
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