PepsiCo Inc (PEP.O) unveiled a $3.3 billion sale of its Tropicana and other juice brands in North America to French private equity firm PAI Partners on Tuesday, as it looks to simplify its product range and move away from high-sugar drinks.
The company, which bought the orange juice maker in 1998 for roughly $3.3 billion and U.S.-based Naked Juice nearly a decade later for $150 million, will keep a 39% stake in the new joint venture and have exclusive U.S. distribution rights for the brands.
The sale will give PepsiCo the funds to develop and grow its portfolio of health-focused snacks and zero-calorie beverages, Chief Executive Officer Ramon Laguarta said, as the company focuses on more profitable brands.
Rival Coca-Cola Co (KO.N) has also been streamlining its product range over the past year, discontinuing its TaB diet soda and Coca-Cola Energy brands in the United States and selling its ZICO coconut water brand.
The juice businesses made about $3 billion in net revenue in 2020 for PepsiCo, with operating profit margins that were below the group's.
The deal is one of the many food and beverage investments PAI has made over the last few years. In 2019, Nestle SA (NESN.S) sold its U.S. ice cream business, including brands such as Häagen-Dazs, to a joint venture backed by PAI in deal valued at $4 billion.