Pepsico Buys Seven-Up’s Overseas Operations

Pepsico Inc., parent of the world’s No. 2 soft-drink producer, said Monday that it has bought the international unit of rival Seven-Up Co. from Philip Morris Cos. for $246 million in cash.

Earlier this year, Pepsico had agreed to buy both the domestic and foreign operations of Seven-Up for $380 million but was rebuffed by the Federal Trade Commission, which last month voted unanimously to oppose the deal. Days later, Philip Morris ended its agreement with Pepsico.

In addition to acquiring the right to sell Seven-Up everywhere except in the United States, Pepsico is buying two Canadian bottling plants owned by Seven-Up in Toronto and Ottawa, the company said.

Pepsico said the purchase of Seven-Up’s international operations, completed Friday, doesn’t require government approval because Seven-Up International is a foreign firm and not subject to U.S. antitrust regulations.

Seven-Up International, headquartered in Lausanne, Switzerland, is the third-largest soft-drink company outside the United States with operations in more than 85 countries. Pepsico ranks behind Coca-Cola Co. as the biggest soft-drink company both worldwide and domestically. In the United States, Coca-Cola holds a 39% market share and Pepsi a 29% share, according to beverage analyst Jesse Meyers.

Although figures on overseas soft-drink market shares were not immediately available, Pepsico said the purchase will increase its overseas volume 17.8% to 1.65 billion cases a year. Despite the increase, officials of Pepsico acknowledged that their company will still have a much smaller presence overseas than Coca-Cola.

“It will close the gap, but Coke is still in a superior position overseas,” said Robert H. Beeby, president and chief executive of Pepsi Cola International.

Beeby said, however, that the acquisition will give Pepsi a big boost in the burgeoning non-cola soft-drink market, which accounts for two-thirds of soft-drink sales abroad.

Coca-Cola, which is based in Atlanta, has said it is proceeding with its planned $470-million acquisition of No. 4 Dr Pepper Co. of Dallas despite FTC opposition.

Philip Morris bought St. Louis-based Seven-Up for $520 million in 1978 and made little profit on the company, which represents a small part of its business.

Philip Morris has said it still intends to sell Seven-Up’s domestic operations.