Fairness Opinion Detail

PBG FOOpen source

The Pepsi Bottling Group, Inc. to PepsiCo., Inc.

BeveragesNon-Alcoholic/Aug 2009/BofA, Centerview, Morgan Stanley, Perella Weinberg

Deal Information

Target

The Pepsi Bottling Group, Inc.

Acquiror

PepsiCo., Inc.

Sector

BeveragesNon-Alcoholic

Target Type

Public

Acquiror Type

Strategic

Advisors

BofA, Centerview, Morgan Stanley, Perella Weinberg

Transaction Metrics

Enterprise Value

$14.7B

EV / LTM Sales

1.1x

EV / LTM EBITDA

8.3x

EV / Fwd EBITDA

7.9x

Advisor Transaction Comparables

Comparable transactions cited by the advisor, excluding the subject transaction.

Advisor: BofA

EV / LTM EBITDA selected range: 8.0x - 10.0x

11 comps


Nov 2008	Coca Cola Amatil Ltd	Lion Nathan Ltd (offer withdrawn on February 9, 2009)	$6.1B	-	10.9x	-
Mar 2008	Lebedyansky JSC	PepsiCo, Inc./The Pepsi Bottling Group, Inc.	$2.1B	-	13.4x	-
Nov 2007	Sandora, LLC Enterprise Value/LTM EBITDA printed as N/A.	PepsiCo, Inc./PepsiAmericas, Inc.	$679M	-	-	-
Jun 2007	Panamco México, S.A. de C.V. Printed as 'Panamco México, S.A. de C.V.', June 2007, USD 3,594m; Perella Weinberg and Goldman Sachs date Coca-Cola FEMSA's Panamerican Beverages acquisition 2002. Linked to the 2002 deal (D7).	Coca Cola Femsa, S.A.B. de C.V.	$3.6B	-	7.7x	-
Apr 2006	Dr Pepper/Seven-Up Companies, Inc.	Cadbury Schweppes plc	$1.5B	-	7.1x	-
Oct 2002	Pepsi-Gemex, S.A. de C.V.	The Pepsi Bottling Group, Inc.	$1.3B	-	6.3x	-
Apr 2001	Hondo Incorporated and Herbco Enterprises, Inc.	Coca-Cola Enterprises Inc.	$1.3B	-	10.7x	-
Feb 2001	Coca-Cola Bottlers Philippines, Inc.	San Miguel Corp./Coca-Cola Company	$1.2B	-	7.3x	-
Aug 2000	PepsiAmericas, Inc.	Whitman Corporation	$662M	-	11.8x	-
Oct 1999	Coca-Cola Beverages plc	Coca-Cola Hellenic Bottling Company S.A.	$2.1B	-	14.5x	-
Sep 1999	Dr Pepper Bottling Company of Texas	Cadbury Schweppes plc/The Carlyle Group	$691M	-	8.1x	-
	Mean			-	9.8x	-
	Median			-	9.4x	-

Advisor: Centerview

EV / LTM EBITDA selected range: 8.0x - 10.0x

11 comps


Nov 2008	Coca Cola Amatil Ltd	Lion Nathan Ltd (offer withdrawn on February 9, 2009)	$6.1B	-	10.9x	-
Mar 2008	Lebedyansky JSC	PepsiCo, Inc./The Pepsi Bottling Group, Inc.	$2.1B	-	13.4x	-
Nov 2007	Sandora, LLC Enterprise Value/LTM EBITDA printed as N/A.	PepsiCo, Inc./PepsiAmericas, Inc.	$679M	-	-	-
Jun 2007	Panamco México, S.A. de C.V. Printed as 'Panamco México, S.A. de C.V.', June 2007, USD 3,594m; Perella Weinberg and Goldman Sachs date Coca-Cola FEMSA's Panamerican Beverages acquisition 2002. Linked to the 2002 deal (D7).	Coca Cola Femsa, S.A.B. de C.V.	$3.6B	-	7.7x	-
Apr 2006	Dr Pepper/Seven-Up Companies, Inc.	Cadbury Schweppes plc	$1.5B	-	7.1x	-
Oct 2002	Pepsi-Gemex, S.A. de C.V.	The Pepsi Bottling Group, Inc.	$1.3B	-	6.3x	-
Apr 2001	Hondo Incorporated and Herbco Enterprises, Inc.	Coca-Cola Enterprises Inc.	$1.3B	-	10.7x	-
Feb 2001	Coca-Cola Bottlers Philippines, Inc.	San Miguel Corp./Coca-Cola Company	$1.2B	-	7.3x	-
Aug 2000	PepsiAmericas, Inc.	Whitman Corporation	$662M	-	11.8x	-
Oct 1999	Coca-Cola Beverages plc	Coca-Cola Hellenic Bottling Company S.A.	$2.1B	-	14.5x	-
Sep 1999	Dr Pepper Bottling Company of Texas	Cadbury Schweppes plc/The Carlyle Group	$691M	-	8.1x	-
	Mean			-	9.8x	-
	Median			-	9.4x	-

Advisor: Morgan Stanley

EV / LTM EBITDA selected range: 8.0x - 10.0x

18 comps


Jan 2009	Better Beverages, Ltd. (Hallettsville, TX) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2009	Pepsi-Cola Bottlers for the Merrimack Valley, Inc. No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2008	Lane Affiliated Companies, Inc. No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2008	Pepsi-Cola Batavia Bottling Corporation (Batavia, NY) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2007	Coca-Cola Korea Bottling Co., Ltd. No per-deal multiples printed.	LG Household & Health Care Ltd.	-	-	-	-
Jan 2007	Panamerican Beverages, Inc. No per-deal multiples printed. Printed as 2007; Perella Weinberg and Goldman Sachs date this deal 2002. Linked to the 2002 deal (D7).	Coca-Cola FEMSA, S.A. de C.V.	-	-	-	-
Jan 2005	Pepsi-Cola Bottling Company of Charlotte, Inc. No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2004	Seltzer & Rydholm, Inc. (Auburn, ME) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2003	Pepsi-Cola Buffalo Bottling Corp. (Buffalo, NY) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2003	Olean Bottling Works, Inc. (Olean, NY) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2002	Pepsi-Cola Bottling Co. of Macon (Macon, GA) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2002	Pepsi-Cola Bottling Co. of Aroostook, Inc. (Presque Isle, ME) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2002	Pepsi-Gemex, S.A. de C.V. No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2001	Herb Coca-Cola No per-deal multiples printed.	Coca-Cola Enterprises Inc.	-	-	-	-
Jan 2001	Nor-Cal Beverage Company, Inc. (Northern California) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2001	Pepsi-Cola Elmira Bottling Co., Inc. (Elmira, NY) No per-deal multiples printed.	The Pepsi Bottling Group, Inc.	-	-	-	-
Jan 2000	PepsiAmericas, Inc. No per-deal multiples printed.	Whitman Corp.	-	-	-	-
Jan 1999	Dr Pepper Bottling Company of Texas No per-deal multiples printed.	Cadbury Schweppes plc and The Carlyle Group (The American Bottling Company)	-	-	-	-
	Mean			-	-	-
	Median			-	-	-

Advisor: Perella Weinberg

EV / LTM EBITDA selected range: 7.0x - 9.0x

19 comps


Selected public bottling transactions
	Jan 1999	Dr Pepper Bottling Company of Texas	American Bottling Company	-	-	8.1x	-
	Jan 2000	PepsiAmericas, Inc.	Whitman Corporation	-	-	12.1x	-
	Jan 2001	Hondo Incorporated and Herbco Enterprises, Inc.	Coca-Cola Enterprises Inc.	-	-	11.4x	-
	Jan 2002	Pepsi-Gemex, S.A. de C.V.	The Pepsi Bottling Group, Inc.	-	-	6.2x	-
	Jan 2002	Panamerican Beverages Inc.	Coca-Cola FEMSA, S.A. de C.V.	-	-	8.5x	-
	Jan 2006	Dr Pepper/Seven Up, Inc.	Cadbury Schweppes plc	-	-	7.1x	-
	Jan 2007	Coca-Cola Korea Bottling Co Ltd (CK)	LG Household and Health Care Ltd.	-	-	9.4x	-
Composite of PBG Private Bottling Acquisitions
	Jan 2001	Pepsi-Cola Elmira Bottling Co., Inc. (Elmira, NY) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	6.5x	-
	Jan 2001	Nor-Cal Beverage Company, Inc. (Northern California) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	8.3x	-
	Jan 2002	Pepsi-Cola Bottling Co. of Macon (Macon, GA) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	8.2x	-
	Jan 2002	Pepsi-Cola Bottling Co. of Aroostook, Inc. (Presque Isle, ME) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	9.7x	-
	Jan 2003	Pepsi-Cola Buffalo Bottling Corp. (Buffalo, NY) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	7.4x	-
	Jan 2003	Olean Bottling Works, Inc. (Olean, NY) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	5.7x	-
	Jan 2004	Seltzer & Rydholm, Inc. (Auburn, ME) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	9.3x	-
	Jan 2005	Pepsi-Cola Bottling Company of Charlotte, Inc. (Charlotte, NC) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	16.6x	-
	Jan 2008	Pepsi-Cola Batavia Bottling Corporation (Batavia, NY) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	8.8x	-
	Jan 2008	Lane Affiliated Companies, Inc. Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	14.2x	-
	Jan 2009	Better Beverages, Ltd. (Hallettsville, TX) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	6.4x	-
	Jan 2009	Pepsi-Cola Bottlers for the Merrimack Valley, Inc. (Merrimack Valley, MA) Multiple provided by PBG management (private PBG acquisition).	The Pepsi Bottling Group, Inc.	-	-	7.2x	-
		Mean			-	9.0x	-
		Median			-	8.3x	-

DCF Assumptions

Discount rate and terminal value assumptions the advisor selected for its discounted cash flow analysis.

BofA

Open

WACC: 7.0% – 8.0%
Terminal method: Perpetuity growth
Terminal assumption: 1.5%
Forecast basis: -
Forecast period: fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo mana… more
fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo management's instruction), discounted to 2009-06-30

Centerview

Open

WACC: 7.0% – 8.0%
Terminal method: Perpetuity growth
Terminal assumption: 1.5%
Forecast basis: -
Forecast period: fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo mana… more
fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo management's instruction), discounted to 2009-06-30

Morgan Stanley

2 DCF scenarios

Open

WACC: 7.0% – 8.0%
Terminal method: Perpetuity growth
Terminal assumption: 1.5%
Forecast basis: -
Forecast period: 2009-07-31 to 2013-12-31 (PBG forecasts 2009-2013)

Perella Weinberg

3 DCF scenarios

Open

WACC: 7.0% – 8.0%
Terminal method: Exit multiple
Terminal assumption: 6.0x – 7.0x (terminal year EBITDA)
Forecast basis: -
Forecast period: fiscal 2009-2013, discounted to 2009-06-30

Advisor	WACC	Terminal method	Terminal assumption	Forecast basis	Forecast period	Filing
BofA	7.0% – 8.0%	Perpetuity growth	1.5%	-	fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo mana… more fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo management's instruction), discounted to 2009-06-30	Open
Centerview	7.0% – 8.0%	Perpetuity growth	1.5%	-	fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo mana… more fiscal 2009-2018 (PepsiCo-PBG forecasts; 5.0% annual FCF growth 2013-2018 at PepsiCo management's instruction), discounted to 2009-06-30	Open
Morgan Stanley 2 DCF scenarios	7.0% – 8.0%	Perpetuity growth	1.5%	-	2009-07-31 to 2013-12-31 (PBG forecasts 2009-2013)	Open
Perella Weinberg 3 DCF scenarios	7.0% – 8.0%	Exit multiple	6.0x – 7.0x (terminal year EBITDA)	-	fiscal 2009-2013, discounted to 2009-06-30	Open

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