How PepsiCo took on Russia

Author: Danielle Myles | Published: 26 Feb 2011

PepsiCo’s latest acquisition is the biggest non-energy investment into Russia and the company’s biggest investment outside the US. The deal’s complexity lies in streamlining US and Russian securities laws and negotiating deal protections with little precedent.

The buyer approached Russian drinks company Wimm-Bill-Dann (WBD) when its owners were not looking to sell. This made structuring the deal tricky in striking a balance between Pepsi’s corporate interests as a strategic buyer, getting the best possible terms for the sellers, and causing the least disruption to the target, said Chris Allen from seller’s counsel Latham & Watkins.

The parties agreed on the sale of 66% of WBD’s shares for $3.8 billion, followed by a mandatory tender offer (MTO). But with few control transactions, the parties had greater leeway to make requests. An example is the share pledge entered into at signing.

"It’s quite uncustomary, in either...