PepsiCo Inc. has agreed to sell its interest in 24 soft-drink bottlers in China to the Hong Kong-listed Tingyi Holding Corp.

As part of the strategic deal, PepsiCo will initially take a 5% stake in the Tingyi-Asahi Beverages Holding Co., which will become PepsiCo's franchise bottler in mainland China. PepsiCo will provide the alliance with access to its global beverage innovation pipeline, according to a company release announcing the transaction.

The combined PepsiCo-Tingyi entity would control about 20 percent of the Chinese soft-drink market, according to data from Euromonitor International. This would result in its overtaking the Coca-Cola Co., which has a market share of nearly 17 percent, Reuters reported.

Ready to welcome a golden age for the Chinese beverage industry amid intense market competition, Tingyi and PepsiCo will continue building up their capacity to seize market opportunities and satisfy consumers' diversified demands with world-class products, Wei Ing-Chou, Tingyi's chairman and CEO, said in the announcement.

To win globally, we need to have absolutely the best business partners locally, PepsiCo Chairman and CEO Indra K. Nooyi said. Tingyi has a history of successful partnerships with other companies, and we believe this proposed alliance will combine Tingyi's superb distribution reach with PepsiCo's innovative prowess, significantly enhancing our beverage business in China in the near-term while maximizing PepsiCo's future growth potential in the fastest-growing beverage market in the world. This is a positive deal for PepsiCo, Tingyi, our existing Chinese bottling partners and consumers in China.

PepsiCo, maker of Pepsi-Cola and 7Up, entered the Chinese market in 1981, and the company's total investment in the country has exceeded 10 billion yuan ($1.6 billion) over the past 30 years.