In a move described as a "portfolio optimization," PepsiCo Inc. said has entered into an agreement with PAI Partners to sell its Tropicana, Naked and other juice brands in North America and certain juice businesses in Europe.
The sale is valued at $3.3 billion, and PepsiCo will retain 39% non-controlling interest in a newly formed joint venture. The transaction is expected to close in late 2021 or early 2022.
PAI, a leading private equity firm with experience in the food and beverage space, will be the majority shareholder of the transferred business. PepsiCo is retaining exclusive U.S. distribution rights to the portfolio of juice brands in its chilled direct store delivery for the small-format and foodservice channels.
PepsiCo bought Tropicana Products Inc. in1998 and Naked Juice Co. in 2006. In recent years, juice sales have been met with increasing resistance as consumer seek out options with less sugar.
PepsiCo's juices delivered about $3 billion in net revenue in 2020, but profit margins were below the beverage and snack giant's overall margins in 2020.
PepsiCo expects to use the proceeds from the sale of these assets primarily to strengthen its balance sheet and to make organic investments in the business.