PepsiCo raises $5.5 billion from spinoff After leaving restaurants, company pays off debt, boosts stock buyback

October 07, 1997|By BLOOMBERG NEWS

PURCHASE, N.Y. -- PepsiCo Inc. said yesterday that it raised $5.5 billion by spinning off KFC, Pizza Hut and Taco Bell into Tricon Global Restaurants Inc. and exiting its restaurant business, to gain cash to pay off most of its short-term debt and boost its stock buyback.

The maker of Pepsi soft drinks and Frito-Lay snacks said it received $4.5 billion from the Tricon spinoff, which was completed yesterday.

It also sold its PepsiCo Food Systems restaurant-supply unit in July to AmeriServe Food Distribution Inc. for about $830 million; sold five small restaurant chains; and completed an initial public offering of its New Zealand restaurant business.

PepsiCo said it will use $3.7 billion of the proceeds to pay off most of its short-term debt. The rest will be used to boost the company's stock buyback plans. Pepsi said it expects to spend to more than $2 billion in 1997 and as much as $3 billion in 1998. Together, the stock repurchases would buy back about 125 million shares, or 8.2 percent of Pepsi's 1.53 billion shares.

"To come up to $3 billion, that's nice to see," said Donaldson Lufkin & Jenrette Securities Inc. analyst Skip Carpenter, who had expected the company to buy back $2.5 billion in stock in 1998.

Shares of PepsiCo rose 31.25 cents to $40.1875 in trading of 2.73 million, compared with the three-month daily average of 3.93 million.

Pub Date: 10/07/97

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