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PepsiCo's $1.2B Buyout of Siete to Strengthen Its Food Portfolio

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PepsiCo, Inc. (PEP - Free Report) has been experiencing strength in its core categories, diversified portfolio, improved digital capabilities and flexible go-to-market distribution systems. 

In the latest revelation, PepsiCo has completed the buyout of Garza Food Ventures LLC, dba Siete Foods (Siete), for $1.2 billion.

Details on PEP’s Latest News

This acquisition looks to strengthen the company's food portfolio, including nutritious, simple foods and ingredients. This popular Siete brand brings more positive choices that resonate well with consumer demand and offer convenient and delicious products.

The deal will add heritage-inspired Siete products to PepsiCo’s portfolio. Siete makes authentic tortillas, salsas, seasonings, sauces, cookies and snacks, among others. Its products are available in grocery stores, club stores and organic food retailers mainly in the United States.

Founded 10 years back, Siete offers Mexican-American food. This deal looks forward to complementing PepsiCo's portfolio by adding this attractive Mexican-American brand, apart from expanding the better-for-you offerings.

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PepsiCo has earlier made buyouts including PopCorners, Bare, Stacy's Pita Chips and recently, Sabra. The company is focused on boosting greater efficiency by reducing costs and investing these savings back to develop scale and core capabilities. 

PEP expects to achieve the productivity goal through savings generated from restructuring actions. Such actions aim at further simplifying, synchronizing and automating processes. In addition, it has been reinforcing its international footprint. The company also concentrates on holistic cost-management initiatives to boost productivity and uses these savings to offset cost inflation and prioritize investments in its brands, innovation and channel expansion.

 

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However, this Zacks Rank #4 (Sell) company’s shares have lost 14.6% in the past three months compared with the industry’s 11.3% decline. This underperformance is due to headwinds in its North American operations, including reduced consumer demand and product recalls in the Quaker Foods North America segment. Adverse currency rates continue to pose challenges.

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