PepsiCo Boss Pours Cold Water on Nestlé Merger Speculation

26 July 2007

PURCHASE, New York: PepsiCo's ceo Indra Nooyi, who has been in the job since October last year, took the opportunity of a quarterly results presentation to refute widely touted rumors of a mega-merger with Nestlé.

"Our strategy has not changed," she insisted, "we are a very, very conservative, careful company when it comes to deal making."

Nooyi (pictured) made it clear that PepsiCo is still on the acquisition trail, but she stressed its targets had price tags in the $2 billion (€1.45bn; £974m) to $5bn range. This would appear to rule out a deal with the $153bn-valued Nestlé.

Instead, Nooyi was keen to emphasise the roll-out of new products which, it is hoped, will counter the slip in North American sales of PepsiCo's second biggest brand, Gatorade.

The new drinks include a low calorie beverage to be marketed to athletes, and a version of Propel fitness water with nutrients. In addition, the company is to overhaul its SoBe LifeWater brand.

Nooyi sees PepsiCo continuing to grow as a snack and drinks provider, offering nuts, seeds and chips made from healthier ingredients.

Second quarter figures revealed earnings of $1.56 billion (€113bn; £760m), up 13% from the year earlier period. Quarterly revenue rose 10% to $9.61bn, fuelled by an 18% increase in international sales.

Data sourced from Wall Street Journal Online; additional content by WARC staff