PepsiCo to acquire Chinese online snacks company Be & Cheery for $705 million

PepsiCo Inc. announced on Sunday that it plans on investing $705 million into Be & Cheery to purchase the Chinese snack company from Haoxiangni Health Food Co Ltd.

The New York-headquartered multinational food and beverage manufacturer sees its acquisition of Be & Cheery as perfectly in line with the company’s long-term goals. PepsiCo is currently working committedly towards building a reputation for the top consumer-focused brand in China in the food and beverage niche. Buying a local business that has dried fruits and nuts as the primary products and operates mostly through the Chinese e-commerce platforms, PepsiCo said, is the right step towards achieving the aforementioned goal.

CEO Ram Krishnan’s Comments On The News

In his statement on Sunday, the CEO of PepsiCo for mainland China, Ram Krishnan said:

“Be & Cheery adds direct to consumer capability, positioning us to capitalize on continued growth in e-commerce and a local brand that is able to stretch across a broad portfolio of products, through both online and offline channels. We also expect to leverage Be & Cheery’s innovation and consumer insights capabilities to drive innovation in other key PepsiCo growth markets.”

Hangzhou based Haoxiangni that makes Jujube as a primary business echoed PepsiCo’s announcement on Sunday and reiterated in a separate filing that the local company has decided in favor of selling its Be & Cheery unit to PepsiCo as it expressed excitement for enhancing its efforts on its primary business from here on.

Sunday’s announcements also highlighted Be & Cheery’s reputation as one of the biggest Chinese online snack companies. Launched in 2003, Be & Cheery has remained in business for around 17 years and saw a massive 5 billion yuan in revenue in fiscal 2019.

Acquisition Is Awaiting Regulatory Approvals And Haoxiangni Shareholder Vote

The transaction, however, is not yet complete. The final proceedings of the acquisition will be undertaken after receiving a few of the pending regulatory approvals. A bunch of other customary conditions and Haoxiangni shareholder vote is also awaited before the transaction can be completed.

At the time of writing, PepsiCo is trading at $146 per share in the stock market that marks an over 7% gain in 2020 so far. Its performance in 2019 was recorded moderately upbeat with share prices surging from $110 in January 2019 to close the year at a much higher $136 that translated to a little under 25% of the annual gain.