PepsiCo to sell Bradenton-based Tropicana and other juice brands for $3.3 billion
PepsiCo Inc. on Tuesday announced that it has entered into an agreement to sell Tropicana, Naked and other juice brands across North America to PAI Partners for pretax cash proceeds of $3.3 billion.
Tropicana, one of the Bradenton area’s largest employers, was founded in 1947 by Anthony T. Rossi, who developed flash pasteurization and pioneered orange juice transport in 1970 via train from Florida to New York.
In the deal announced Tuesday, PepsiCo will retain a 39% non-controlling interest in a newly formed joint venture.
PepsiCo bought Tropicana from Seagram Co. Ltd in 1998 for $3.3 billion, the same price announced in the sale to PAI on Tuesday.
A year after PepsiCo bought the juice maker, Tropicana, in need of more space, was looking to build executive offices elsewhere in Manatee County, including at Lakewood Ranch. But in 1999, Tropicana decided instead to build its new executive offices across the street from its juice plant at 1001 13th Ave. E. In 2004, PepsiCo moved Tropicana’s executive offices out of its recently completed space in Bradenton to Chicago.
There was no indication in Tuesday’s announcement that changes are being considered for the Bradenton juice plant.
PAI, a private equity firm based in France with experience in food and beverage, will be the majority shareholder of the transferred business, with PepsiCo retaining exclusive U.S. distribution rights to the portfolio of brands, according to a statement from the company.
“They manage $13.5 billion in assets and they have probably done a lot of these deals,” Eddie Sanchez, a finance instructor at USF Sarasota-Manatee, said of PAI. He added that he would expect the equity firm to cut costs and reduce staff to maximize profits.
The joint venture with PAI allows PepsiCo to focus on value and growth for the brands, PepsiCo Chairman and CEO Ramon Laguarta said in a statement.
“In addition, it will free us to concentrate on our current portfolio of diverse offerings, including growing our portfolio of healthier snacks, zero-calorie beverages, and products like SodaStream which are focused on being better for people and the planet,” Laguarta said.
The juice businesses delivered about $3 billion in net revenue in 2020, with operating profit margins that were below PepsiCo’s overall operating margin in 2020.
PepsiCo expects to use the proceeds from the sale of the assets to strengthen its balance sheet and to make investments in the business. The transaction is expected to close in late 2021 or early 2022, subject to customary conditions, including regulatory approvals.
PepsiCo products are sold in more than 200 countries and territories around the world. PepsiCo generated more than $70 billion in net revenue in 2020, driven by a food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker, Tropicana and SodaStream.
“We are delighted to bring these storied beverage brands into the PAI portfolio through another partnership with a leading global food and beverage company,” Frédéric Stévenin, a managing partner at PAI, said in a statement.
“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.”
Jacki Dezelski, president and chief executive officer of the Manatee Chamber of Commerce, said she looks forward to continued leadership and engagement of Tropicana’s local team in Bradenton.
“We believe this next chapter for Tropicana, and its Bradenton operations, “Dezelski said, “is a testament to the strength of the global fresh juice market and Tropicana’s legacy as a top-tier brand.”
This story was originally published August 3, 2021 at 10:30 AM.
