PEPSICO PLANS STOCK SPINOFF.Byline: Glenn Collins The New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times Pepsico Inc. announced Thursday that it would spin off its $13.8 billion KFC KFC Kentucky Fried Chicken (restaurant chain) KFC Kenya Flower Council KFC Kitchen Fresh Chicken (Kentucky Fried Chicken motto) KFC Kung Fu Cult (Cinema) KFC Kitchen Fixed Charge , Pizza Hut and Taco Bell Taco Bell Corp., a subsidiary of Yum! Brands, Inc., is a Mexican-style quick service restaurant chain based in Irvine, California, United States. The restaurant has locations primarily in the United States and Canada, but also operates outlets in several other markets. restaurant businesses as a publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. , creating a fast-food giant second only to McDonald's. Wall Street has long advocated a spinoff of the company's struggling fast-food unit to allow Pepsico to better focus on its Pepsi beverage operations and Frito-Lay snack business, whose international profits jumped 16 percent in the first nine months of 1996. ``We need to bring all our human and financial resources to bear on our soft-drink and snack businesses,'' said Pepsico chairman and chief executive Roger Enrico, adding that the company's goal was to ``dramatically sharpen Pepsico's focus.'' In an interview, Enrico said the company planned to spin off 100 percent of the restaurant unit to stockholders, who would receive shares in the new company. He said Pepsico would seek rulings from the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. to create a tax-free distribution to shareholders and added that Pepsico would not assign any of its $9 billion of debt to the new spinoff. Pepsico has not yet determined the valuation of the new company's shares, but analysts estimated that it could be $4 to $6. Several analysts predicted that the target share price for the post-spinoff Pepsico could be in the low $40s. But Roy D. Burry burry said of wool when it contains plant burrs, the adherent seed pods, usually of Medicago polymorpha. , a securities analyst for Oppenheimer & Co., said that Thursday's rise in the stock price ``has already discounted any benefit from a spinoff, and we see Pepsico as a mid-$30's performer.'' Pepsico shares rose as much as 12 percent in heavy trading on The New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. on Thursday after The Wall Street Journal reported that a spinoff was expected. Pepsico made its announcement after the stock market closed, with shares of its stock up $2.50, or nearly 8 percent, to $34.50, on a day the Dow was off 94 points. Pepsico's archrival arch·ri·val n. A principal rival. , Coca-Cola Co., had no comment about the spinoff. Pepsico's 13-member board, which endorsed the spinoff plan unanimously Thursday in a three-hour meeting, must yet decide whether to approve the definitive spinoff plan, which is expected to be completed by the end of the year. Merrill Lynch & Co. will be the financial adviser, the company said. Enrico said that before the spinoff would be accomplished, Pepsico intended to sell off its casual-dining businesses, which include the California Pizza Kitchen California Pizza Kitchen (NASDAQ: CPKI, known within the food industry as CPK) is a casual dining restaurant chain that specializes in California-style pizza. The restaurant was started in 1985 by attorneys Rick Rosenfield and Larry Flax in Beverly Hills, California, and Chevy's Mexican restaurants. The company will also seek to sell its Pepsico Food Systems Unit, which distributes restaurant equipment and supplies to its and other companies' restaurants. CAPTION(S): 2 Charts Chart: (1-2) Pepsi spinoff PepsiCo's restaurants, which include KFC, Pizza Hut and Taco Bell, have traditionally been less profitable than other divisions of the company. The restaurant division will have about 29,000 stores worldwide. Associated Press |
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