Goldman Sachs Comments on PepsiCo's Acquisition of Russia's Wimm-Bill-Dann
According to published reports by Goldman Sachs, on December 2, 2010, PepsiCo, Inc. (NYSE: PEP) announced that it plans to acquire a 66% stake in Russia's leading dairy and juice company, Wimm-Bill- Dann (NYSE: WBD), for $33 per ADR share.
In connection with the proposed acquisition, PEP intends to tender for the remaining shares, assuming it secures government approval of the acquisition. The proposed deal equates to around $5.4bn in enterprise value and represents a forward EV/EBITDA multiple of 16.4x (pre-synergy).
According to Goldman Sachs,the acquisition would give PEP a commanding share in Russia's juice market (over 50%) and 6 of the top 20 food and beverage brands in Russia.
Goldman Sachs upholds that the 12-month P/E derived price target remains unchanged at $75, and view the deal as “long-term strategic positive since it would enhance PEP's exposure to high growth categories in key emerging markets.”
Goldman Sachs maintains its Buy rating and $72 price target.
PepsiCo Inc. closed yesterday at $65.20.
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