PepsiCo’s restaurant business, with about $10 billion in annual revenues, includes the global Pizza Hut, KFC and Taco Bell brands. Its packaged goods business consists of Pepsi-Cola Company and Frito-Lay Company, which generate some $20 billion in annual revenues.
Under terms of the plan, the separation of the packaged goods and restaurant businesses will occur at the end of the day on October 6, 1997. Shareholders of record on September 19, 1997 will receive one share in the new restaurant company, Tricon Global Restaurants, Inc., for every 10 shares of stock they hold in PepsiCo, Inc.
The plan approved by the Board calls for Tricon to enter into separate financing arrangements and to pay PepsiCo a one-time distribution of $4.5 billion at the time of the spin off. PepsiCo intends to use the money to pay down debt and repurchase shares.