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PEPSICO FOODS INTERNATIONAL AND GENERAL MILLS TO MERGE SNACK FOOD BUSINESSES IN EUROPE

 PEPSICO FOODS INTERNATIONAL AND GENERAL MILLS
 TO MERGE SNACK FOOD BUSINESSES IN EUROPE
 Joint-venture includes companies in Belgium, France,
 The Netherlands, Greece, Portugal and Spain
 BRUSSELS, Belgium, May 12 /PRNewswire/ -- PepsiCo Foods International (PFI), the international snack food division of PepsiCo, Inc. (NYSE: PEP), and General Mills, Inc. (NYSE: GIS), today announced an agreement in principle to merge six of their existing European snack food operations into one company to develop, manufacture, and market a wide range of snack foods. The agreement is subject to the signing of a definitive contract and to review by the European Commission. The companies said they will make the necessary filings here shortly.
 The joint venture will combine PepsiCo's existing salty and sweet snack businesses in Spain, Portugal and Greece with General Mills' existing salty snack, savory snack and sweet biscuit businesses in France, Belgium, and The Netherlands. Products marketed by the new venture will continue to be sold under their existing brand names, the companies said.
 The PFI operations involved are Productos PepsiCo, S.A., in Spain; Laprovar Sociedade de Productos Alimentarios, S.A., in Portugal; and Tasty Foods, S.A., in Greece. The General Mills companies involved are Biscuiterie Nantaise-BN, S.A. in France; Smiths Food Group, B.V. in The Netherlands; and Smiths Food Group, S.A. in Belgium. None of the PFI and General Mills companies geographically overlaps.
 Combined annual net sales of the new company will exceed US$600 million. At current strength, the new company will employ 4,650 people. Anticipated growth, driven by aggressive capital investment and the introduction of new innovative products, is expected to increase employment opportunities.
 The partners said today that the new venture will benefit from both investment programs now underway and those planned in the future. PFI has already earmarked US$70 million for a new manufacturing plant at Corregado, Portugal, outside Lisbon, and General Mills is now building a US$55 million production facility at Raamsdonksveer in The Netherlands. Both plants will incorporate state-of-the-art manufacturing technology.
 The agreement announced today involves no cash. It calls for the partners to contribute the respective businesses which will comprise the joint venture, with PFI receiving a 60 percent stake and General Mills a 40 percent stake in the new company. PFI will assume responsibility for day-to-day management, with both partners naming directors in proportion to their respective equity.
 Commenting on the proposed venture, Michael H. Jordan, chairman of PepsiCo International Foods and Beverages, said: "The businesses involved are extremely complementary from the standpoint of geography, technology, distribution systems and product lines. For example, salty snacks and grain-based extruded snack products share similar product development and manufacturing technologies. The combined strength of PFI's salty and sweet snack production technology with General Mills' expertise in the grain-based snack and sweet biscuit segments will enable us to provide European consumers with a wider choice of quality products."
 Stephen W. Sanger, executive vice-president of General Mills, with responsibility for International Foods, said: "The new company will benefit from shared snack product research and development capabilities and from improvements in manufacturing processes. This will deliver greater production efficiency and improved product quality, and will enable us to bring new, quality products to the consumer faster than before."
 PFI, headquartered in Dallas, Texas, operates 27 salty and sweet snack businesses in 24 countries. In 1991, PFI generated over US$4 billion in systemwide retail sales of local and global brands such as Ruffles, Doritos, Sonrics, Cheetos and Fritos.
 General Mills, headquartered in Minneapolis, Minn., generated $4.9 billion of its $7.2 billion in worldwide sales last year from its food businesses, operating primarily in North America. It holds leading positions in ready-to-eat cereals, dessert and baking mixes, flour, yogurt, seafood and various snack foods.
 The company's Red Lobster Seafood and The Olive Garden Italian restaurant chains account for nearly one-third of General Mills' sales.
 Commenting on the proposed merger, Wayne Calloway, chairman and chief executive officer of PepsiCo, Inc., and Bruce Atwater, chairman and chief executive officer of General Mills, Inc., stressed the benefits of a single combined company. They noted that the PepsiCo and General Mills "shared values of product quality, innovation and fundamental commitment to increased shareholder returns should contribute to a smooth, harmonious and successful venture."
 -0- 5/12/92
 /CONTACT: T.A. Fassburg of PepsiCo Foods International, 32-2-640-0495 (Brussels); or R.C. Shulstad, 612-540-3745, or (analysts) D. Belbas, 612-540-2443, both of General Mills; or K. Ross, 914-253-2725, or (analysts) M. Moore, 914-253-3035, both of PepsiCo/
 (PEP GIS) CO: PepsiCo Foods International; General Mills, Inc. ST: Texas, Minnesota IN: FOD SU: TNM


CK -- NYTU004 -- 8918 05/12/92 07:59 EDT
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Publication:PR Newswire
Date:May 12, 1992
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