PepsiCo Gains Ground in Russia (PEP, WBD, JMBA, MTL, NILSY, OGZPY)

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U.S. beverage giant PepsiCo (PEP) is continuing its foray into Russia’s food and beverage market with its announced acquisition of Russian dairy products and fruit-juice maker Wimm Bill Dann Foods (WBD) in a deal valued at $5.8 billion.

The deal is PepsiCo’s largest acquisition outside the U.S ever according to the Wall Street Journal, enabling the company to become the biggest food-and-beverage business in Russia and a leader in Russia’s growing dairy market.

Shares of PepsiCo were down about 1% Thursday. Overall, the Beverage Stocks Index is up fractionally for the day, with Jamba (JMBA) posting the biggest gain.

Investors have reacted positive to the deal, sending Wimm-Bill-Dann’s stock up about 30%. As a whole, Russia Stocks and ADRs were trading in positive territory, up about 5% on Thursday. Russian mining company Mechel OAO (MTL), which was up more than 7%, the world’s top nickel and palladium miner MMC Norilsk Nickel (NILSY), up 4%, and Gazprom OAO (OGZPY), up by more than 3%, are the other top gainers for the day.

Under the deal, PepsiCo will initially acquire 66% of Wimm-Bill-Dann for as much as $3.8 billion, and subsequently look to take over the whole company for $5.4 billion in total enterprise value. The deal, however, will require approval from the Russian government, which has been receptive to the acquisition.

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Tags: JMBA, MTL, NILSY, OGZPY, PEP, WBD