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PepsiCo Soft Drink Unit to Function More Like Snack Biz

PURCHASE, N.Y. -- PepsiCo Inc. took steps this week to have its soft drinks operation function more like Frito-Lay Inc., its snacks business. The soft drink maker is offering to buy the shares it doesn’t already own of its two largest bottlers, Pepsi Bottling Group and PepsiAmericas, for $6 billion, The Dallas Morning News reported.

PepsiCo, based in Purchase, N.Y., said the aim is to cut costs, become more "nimble" and infuse some momentum into a segment of its business hurt by slumping sales. If the deal is approved by shareholders of the two bottling companies, PepsiCo would have in-house control of both production and distribution of 80 percent of the beverages produced under the various PepsiCo brands in North America, according to the report.

"In short, we would be creating another Frito-Lay-type operating company within PepsiCo," Indra Nooyi, PepsiCo’s chairman and chief executive officer, told analysts.

"Frito-Lay has some very, very interesting ideas on how to lower the cost and improve the efficiency" of the beverage distribution systems, Nooyi stated.

A unified beverage operation would give the company "the ability to take those ideas," and quickly implement them in the beverage side of the business.

PepsiCo currently owns 33 percent of Somers, N.Y.-based Pepsi Bottling Group and 43 percent of PepsiAmericas, which is based in Minneapolis, the newspaper reported.

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