Wednesday March 31, 3:43 pm Eastern Time
INTERVIEW - Pepsi Bottling IPO makes CEO bubbly
By Amy Yuhn
NEW YORK, March 31 (Reuters) - Wall Street's flat reaction to the Pepsi Bottling Group Inc. (NYSE:PBG - news) initial public offering on Wednesday did not take the fizz out of Chairman and Chief Executive Craig Weatherup's enthusiasm for the stock.
''There's not much risk in this stock, if any,'' Weatherup told Reuters in an interview.
Pepsi Bottling, which sells about 55 percent of Pepsi soft drinks in North America, went public at $23, the low end of the $23-$26 range. The stock then dipped $1.25 to $21.75 Wednesday afternoon.
''We are delighted being public at any price,'' said Weatherup, the former president of Pepsi Bottling parent PepsiCo Inc. (NYSE:PEP - news) and a former top executive at Pepsi-Cola Co., which survives as PepsiCo's concentrate business.
Analysts, however, have said that the stock is likely to dip in the days following the offering and that the next three to five years will be challenging in the bottling industry.
Weatherup said Pepsi Bottling was off to a good start in 1999 and will show a profit this year. The company benefited by separating into a stand-alone operation in November, nearly five full months before the stock offering, he said.
Pepsi Bottling, which has about $7 billion in annual sales, raised $2.3 billion from its initial offering of 100 million shares, one of the biggest IPOs in stock market history.
The company is using the proceeds to pay down its substantial debt, which will remain at about $3.3 billion after the offering profits are applied.
PepsiCo will hold about 43.5 percent of the voting power but just 35.4 percent of the common shares outstanding. The parent company decided last year to shed the capital-intensive bottling operations and focus on promoting its beverage brands as part of its effort to become a leaner competitor to No. 1 soft drink maker Coca-Cola Co. (NYSE:KO - news).
Pepsi Bottling has 37,000 employees operating 72 plants worldwide and 7,000 trucks in North America alone.
Operating as an independent company will also allow Pepsi Bottling to be more aggressive in the rapidly consolidating bottling industry.
Weatherup said Pepsi Bottling will continue to buy independent Pepsi bottlers throughout the United States.
''Consolidation seems to continue at an ever-increasing pace,'' Weatherup said. ''The Pepsi system will and is consolidating as we speak, and we tend to be the primary beneficiary of that.'' |
