PepsiCo Inc said on Monday it will combine the North American operations of Pepsi Bottling Group Inc and PepsiAmericas Inc in a new bottling unit to be run by Pepsi Bottling's chief executive, Eric Foss.
The unit, to be called PepsiCo Bottling North America, will be effective once PepsiCo closes the acquisitions of its two largest bottlers.
PepsiCo shares rose 0.6 percent in premarket trade.
The execution risk surrounding the integration of the bottlers is a key concern of investors, according to Consumer Edge Research analyst Bill Pecoriello.
Given the heavy lifting that will be required to integrate the three separate companies, realize cost and revenue synergies, along with eventual route-to-market changes, a strong leader is required, Pecoriello said in a research note. We can think of no executive better positioned for this role than Eric Foss.
The unit will comprise all current Pepsi Bottling and PepsiAmericas operations in North America and will account for about three-quarters of the PepsiCo drinks sold there.
The maker of Pepsi-Cola, Tropicana juice and Gatorade sports drink said it will form a special advisory board, which will include PepsiCo CEO Indra Nooyi and PepsiAmericas CEO Robert Pohlad, to facilitate a smooth transition.
PepsiCo agreed in August to acquire the bottlers for $7.8 billion as it seeks to cut costs and boost profits in North America. [ID:nN041054]
Beyond the integration of the businesses, Pecoriello said PepsiCo will have to show that its newly integrated system has a competitive advantage over the franchise model still being used by rival Coca-Cola Co. Coca-Cola sells drink concentrate to independent bottlers who bottle and distribute the drinks.
(Reporting by Martinne Geller; Editing by Derek Caney and John Wallace)