Pepsi Bottling Group pbg said Monday that it has rejected what it called a "grossly inadequate" acquisition offer from soft drink maker PepsiCo pep.
The bottler also looked to shield itself from any bids it doesn't deem favorable, saying it has approved a stockholder rights plan. Such plans, known as "poison pills," are commonly used to try to hold off hostile takeovers.
The $6 billion proposal for Pepsi Bottling and PepsiAmericas pas would have let PepsiCo control about 80% of its total North American beverage volume.
Pepsi Bottling Group said in a letter to PepsiCo Chairman and Chief Executive Indra Nooyi that it values its relationship with PepsiCo, but would not agree to a deal that doesn't reflect its "true value."
Pepsi Bottling pointed out to PepsiCo that the offer, made April 20, came two days before its first-quarter earnings. The bottler's first-quarter profit more than doubled on a favorable tax audit settlement, which led it to boost its earnings forecast for the year. The results also easily beat Wall Street's expectations.
Pepsi Bottling said its board's decision was based on the unanimous recommendation of a special committee of independent directors.
The board also approved retention arrangements for some key workers and bylaw amendments related to notice and informational requirements for stockholder actions.
PepsiCo currently owns 33% of Somers, N.Y.-based Pepsi Bottling group and 43% of PepsiAmericas, based in Minneapolis. Its offers equated to $29.50 per share for Pepsi Bottling Group and $23.27 per share for PepsiAmericas.
Bill Pecoriello, an analyst who heads ConsumerEdge Research, said more realistic prices are at least $38 a share for Pepsi Bottling and $28 a share for PepsiAmericas. He expects PepsiAmericas to also reject the offer as inadequate.
"We believe these transactions will get done and that the bottlers will meet PepsiCo somewhere in the middle," he said.