Moody's may up Lebedyansky

Moody's Investors Service said it placed the Ba3 corporate family rating of OJSC Lebedyansky on review for possible upgrade, along with its Aa3.ru national scale rating. The review was initiated by news that PepsiCo (rated Aa2) and The Pepsi Bottling Group (rated A2) have agreed to jointly acquire a 75.53% stake in Lebedyansky for about $1.4 billion.

The transaction is conditional. Among other conditions, Lebedyansky is to spin-off its baby food and mineral operations, with PepsiCo and Pepsi Bottling to buy the stake in Lebedyansky's key juice business. The spin-off and the acquisition of the stake are not expected to be completed before the third quarter of 2008. Shortly after the transaction closes, PepsiCo and Pepsi Bottling will make steps to increase its stake in the company up to 100% as required by Russian law, Moody's said.

The review will focus on terms of the transaction, the expected integration of Lebedyansky's operations into those of PepsiCo and Pepsi Bottling in Russia and the level of support to be expected from the acquiring companies. The review is expected to be completed in conjunction with the closing of the transaction, the agency said.

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