John,
Have u seen this?
Dow Jones Newswires -- June 2, 1998
PepsiCo Inc. Files Suit To Terminate Large
U.S. Bottler
By Nikhil Deogun
ATLANTA (Dow Jones)--PepsiCo Inc. (PEP) filed a lawsuit to cut off
one of its largest independent bottlers, saying the franchisee threatened to
intervene against Pepsi in its antitrust lawsuit against Coca-Cola Co. (KO)
unless Pepsi agreed to certain demands.
The move appears unprecedented, as Pepsi says it has never terminated a
contract with a U.S. bottler, whose agreements with Pepsi carry on "in
perpetuity" unless certain obligations aren't met. In a blistering letter to
bottlers, Roger Enrico, PepsiCo's chairman and chief executive,
characterized the demands by Central Investment Co., of Cincinnati, as "a
way to force us to pay a stupendous ransom" and referred to the bottling
company officials as "traitors."
In an interview, Enrico said two top officials from Central Investment,
including Chairman John F. "Bud" Koons, met with the PepsiCo chief on
Monday and demanded that he sign an agreement within 24 hours giving
Central Investment additional franchise territory, special concentrate prices
and certain marketing funds - and that the agreement be kept confidential.
If not, the bottler would side with Coke in Pepsi's recent lawsuit accusing
Coke of attempting to "freeze" Pepsi out of selling beverages in restaurants
and movie theaters that are supplied by independent food distributors.
"The practical effect of their threatened intervention is to place them on the
side of the Coca-Cola Company and against all of us," Enrico wrote in his
letter. "In my book that makes them traitors to our system, and when you
have a traitor in your camp the only choice you have is to get them out."
P.S.....Yes KO is overvalued, its been said now for umpteen years, and anyalst will be right one of these years, but I happen to think now is not the time to short KO, summer months are known to be not a favorable time for techs, If I was to short it would have been 1-2 weeks after Labor day, this is when the rotation will start back to the Techland and out of the consumer area...good luck though.
Also just imagine if some PEP bottlers line up against PEP, and take hold of KO, what kind of growth will KO have then. |
