Shares of OAO Lebedyansky jumped the most in more than a year after the Kommersant daily said PepsiCo Inc agreed to take control of Russia's biggest juice maker for at least US$1.5 billion.
PepsiCo may announce the purchase of a 76 percent stake within two months, the newspaper said, citing an unidentified Russian banker working on the transaction and an unspecified Lebedyansky executive. Deutsche Bank AG is advising PepsiCo on the purchase, according to Kommersant.
Lebedyansky, which also makes baby-food products, has 32 percent of the Russian juice market, the Moscow-based company said on May 30. Russian lawmaker Nikolai Bortsov owns 30 percent of the company and his son Yuriy Bortsov, Lebedyansky's board chairman, holds another 25 percent, according to spokesman Alexander Kostikov. A quarter of the shares are publicly traded.
Kostikov declined to comment on the Kommersant report. Alexander Shalnev, a spokesman for PepsiCo in Russia, could not be reached when called at his office in Moscow. Marina Malakhova, a spokeswoman at Deutsche Bank's Russian unit, wouldn't comment.
The shares surged 11 percent to 2,700.81 rubles on the Micex Stock Exchange, the biggest intraday gain since at least July last year. The shares were up 119.46 rubles (US$4.69), or 4.9 percent, to 2,552 rubles at 1:06pm in Moscow, heading for a record close. The stock has risen by a fifth this year, valuing the company at 52.3 billion rubles.
PepsiCo, the maker of Fritos chips and Mountain Dew soda, may spend as much as US$2 billion this year to add snacks or drinks to raise earnings and gain market share abroad, chief executive officer Indra Nooyi said last month. Russia's US$146 billion food retailing industry, Europe's fastest growing, may grow 24 percent this year, according to Renaissance Capital investment bank.
"PepsiCo is producing juices globally, but not in Russia," where it has 14 percent of the water market, said Anna Kochkina, an analyst at Aton Capital brokerage in Moscow with a "buy" recommendation.
Lebedyansky may also benefit from the sale as "it's always positive when a strategic investor, especially such as PepsiCo, buys a stake in the company," she added.
Last year's creation of X5 Retail Group NV through the US$2.1 billion merger of discount grocer Pyaterochka with the more upscale Perekriostok chain, controlled by billionaire Mikhail Fridman's Alfa Group, was the biggest transaction in the Russian retail industry.
BP Plc's US$7.7 billion investment in 2003 to create Russian oil venture TNK-BP was the largest private foreign investment in a Russian company.