Seagram Co. is selling its Tropicana juice business to PepsiCo Inc. for $3.3 billion, dropping a plan to sell the company in a public stock offering.
The deal, announced Monday, means Pepsi will compete in yet another arena with Coca-Cola Co., which owns the Minute Maid juice brand.
Tropicana is the runaway leader in chilled orange juice and has been expanding its breakfast-table lineup with exotic fruit blends, calcium-added juice and fruit drinks called Twisters. It had sales of $2 billion last year.
Seagram, the Canadian liquor giant and owner of Universal Studios, announced in May it would sell Tropicana to help fund its purchase of PolyGram, the world's largest music company. Seagram initially hoped to raise $3.5 billion to $4 billion by selling Tropicana to the public, but had said it would entertain offers from interested bidders.
Seagram bought Tropicana for $1.2 billion in 1988 and acquired the Dole line of blended juices for a reported $240 million in 1995.
Tropicana accounted for 40 percent of the ready-to-drink orange juice market in the United States and 71 percent of the lucrative not-from-concentrate segment. Its beverages are sold in 20 countries.
Tropicana is headquartered in Bradenton, Fla., and employs about 5,000 people around the world.
PepsiCo, which owns the Frito-Lay snack foods company, had revenue of $21 billion last year. Pepsi is the No. 2 soft drink behind Coke.
By purchasing PolyGram and shedding Tropicana, Seagram is now mainly focused on entertainment for the first time in its history. The producer of Absolut vodka, Seagram's V.O. and Chivas Regal whisky entered the entertainment world with the purchase of MCA Inc., now known as Universal Studios, for $5.7 billion in 1995.
By Eric R. Quinones