MEXICO CITY - Pepsi-Cola Co. has strengthened its place in the world's second-largest soft drink market with a deal giving it a 25 percent share and management say in its key Mexican franchise bottler, Grupo Embotellador de Mexico SA de CV (Gemex). The deal, confirmed in a joint announcement by Mexico City-based Gemex and Pepsi-Cola International Ltd. of Somers, N.Y., involves Pepsi paying US$154 million for the 25 percent equity stake. Gemex gains three direct Pepsi bottling units in the central Mexican cities of Durango, Aguascalientes and Zacatecas.
In addition, the Mexican bottler wins the right to all bottling in the Mexican territory where Pepsi products are not available, and the option to acquire all the U.S. soft drink maker's vacant franchise territory in Mexico.
Separately, Gemex's founders - Mexico's Molina family - have agreed to sell their voting shares to give Pepsi operating control of the firm after seven years. Pepsi will pay the family a US$50 million premium.
Gemex, which runs 33 soft drink bottling lines in nine plants and nine purified water lines in six plants in Mexico, reported revenue of about US$414 million last year.
The Mexican firm is in the midst of a major investment program designed to integrate PET bottle production with its bottling operations.
A total of US$70 million was earmarked for plastics packaging in 1994 and this year through Gemex subsidiary Procesos Pl sticos SA de CV.
The investment includes the purchase of new blow molding preform injection lines, injection presses to make polypropylene/high density polyethylene twist-off bottle caps, and blow molding machines for the bottling plants.
Gemex, responsible for 35 percent of Pepsi's soft drink sales in Mexico, eventually could handle more than half of such sales in the country, said a joint-venture spokesman.