PepsiCo Inc. announced to buy back the bottling operations it spun off a decade ago. PepsiCo Inc. launched a $6 billion takeover bid for its two largest independent bottlers late Sunday. PepsiCo Inc. is offering $29.50 in cash and stock for each share of Pepsi Bottling Group, Inc (NYSE:PBG), valuing the company at about $6.4 billion and in a separate offer for PepsiAmericas, $23.27 per share, that values that bottler at about $2.9 billion. An investigation on behalf of current shareholders of The Pepsi Bottling Group, Inc. (Public, NYSE:PBG) over potential breaches of fiduciary duty by the board of The Pepsi Bottling Group, Inc was announced.

The stocks of both bottlers soared Monday, hitting levels that were above the implied acquisition price. Pepsi Bottling Group shares were recently up 21% to $30.48 and PepsiAmericas shares recently added 21% to $24.08. According to the investigation by a law firm the investigation focuses on possible Pepsi Bottling Group, Inc. shareholder (NYSE:PBG) claims over potential breaches of fiduciary duty by the board of The Pepsi Bottling Group, Inc. arising out of their attempt to sell Pepsi Bottling Group to PepsiCo, Inc. PepsiCo owned 33.1% of PBG stock as of February 13, according to PBG's proxy filing with the U.S. Securities and Exchange Commission (SEC). Two PepsiCo executives sit on Pepsi Bottling Group 's board,- John C. Compton, head of PepsiCo Americas Foods, and Cynthia M. Trudell, chief personnel officer and a former director of PepsiCo. Pepsi already also owns one-third Pepsi Bottling Group and over two-fifths of Minneapolis-based PepsiAmericas. A decade ago, Pepsi sought to separate itself from its bottlers, figuring it would help the company focus on soft-drink growth while keeping bottling assets off its balance sheet. Pepsi Chairman and Chief Executive Indra Nooyi reportedly said business conditions had changed significantly since then. Owning the two big bottlers would give Pepsi control over how it distributes its beverages, allowing it to revamp production and distribution and squeeze out costs. Combining Pepsi with its two main bottlers would give Pepsi control of about 80% of its North America beverage distribution volume.

Late last year Pepsi Bottling began distribution of Crush sodas, made by rival Dr Pepper Snapple Group Inc. and a stronger brand than Pepsi's fruit-soda offerings. PepsiCo spent $543 million last year to fire 3,500 employees and close plants as part of plans to save $1.2 billion over the next three years. Pepsi said its efforts at consolidation would create annual pre-tax synergies of more than $200 million through cost reductions and efficiencies of scale, and expects to boost annual earnings by 15 cents a share once those synergies are fully realized. Pepsi on Monday reported earnings that were better than expected. Pepsi posted first-quarter net income of $1.14 billion, or 72 cents a share, compared with $1.15 billion, or 70 cents a share, a year earlier. North American beverage volume fell 6%, hurt by a mid-single-digit decline in carbonated soft drinks and a double-digit decline in sports drinks. The company said it faced a challenging comparison because of the launch of G2 and Gatorade Tiger in the prior year. International revenue increased 2.6% as profits fell 4.5%. In an interview, PepsiCo's Chief Financial Officer Richard Goodman said the bottler deals would help the company in a variety of ways by allowing a greater push for brands like Gatorade through the bottling system. PepsiCo and bigger rival Coca-Cola Co. sell beverage concentrate and syrup to licensed bottlers, which add water and other ingredients, put the mixture in bottles and cans and sell it. Pepsi Bottling Group, Inc operates carbonated soft drinks and other ready-to-drink beverages. It conducts business in all or a portion of the United States, Mexico, Canada, Spain, Russia, Greece and Turkey. Pepsi Bottling Group, Inc had in 2007 a total revenue of $13.591billion and in 2008 $13.796billion with a net income in 2007 of $532M and in 2008 of $162million. Pepsi Bottling Group, Inc is located in Somers, NY and its shares (NYSE: PBG) traded recently at $30.72 per share and $25.20 per share on last Friday, down from $32.47 per share in September 2008, and $40.64 per share in the beginning of 2008, with an all time high of over $42.60 in 2007.