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Acquisitions & Divestitures (Notes) | 8 Months Ended
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Sep. 05, 2020
Acquisitions & Divestitures [Abstract] |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | Acquisitions and Divestitures Acquisition of Pioneer Food Group Ltd. On March 23, 2020, we acquired all of the outstanding shares of Pioneer Foods, a food and beverage company in South Africa with exports to countries across the globe, for 110.00 South African rand per share in cash. The total consideration transferred was approximately $1.2 billion and was funded by the Bridge Loan Facilities entered into by one of our international consolidated subsidiaries. See Note 8 for further information. We accounted for the transaction as a business combination. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our AMESA segment. The assets acquired and liabilities assumed in Pioneer Foods as of the acquisition date, which primarily include goodwill and other intangible assets of $0.8 billion and property, plant and equipment of $0.4 billion, are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized. We expect to finalize these amounts as soon as possible, but no later than the second quarter of 2021. In connection with our acquisition of Pioneer Foods, we have made certain commitments to the South Africa Competition Commission, including a commitment to provide the equivalent of 7.7 billion South African rand, or approximately $0.5 billion as of the end of the third quarter of 2020, in value for the benefit of our employees, agricultural development, education, developing Pioneer Foods’ operations and enterprise development programs in South Africa. Included in this commitment is 2.2 billion South African rand, or approximately $0.1 billion, relating to the implementation of an employee ownership plan and an agricultural, entrepreneurship and educational development fund, which is an irrevocable condition of the acquisition and will primarily be settled within the twelve-month period from the acquisition date. This was recorded in selling, general and administrative expenses in the 36 weeks ended September 5, 2020. The remaining commitment of 5.5 billion South African rand, or approximately $0.3 billion, relates to capital expenditures and/or business-related costs which will be incurred and recorded over a five-year period from the acquisition date. Acquisition of Rockstar Energy Beverages On April 24, 2020, we acquired Rockstar, an energy drink maker with whom we had a distribution agreement, for an upfront cash payment of approximately $3.85 billion and contingent consideration related to estimated future tax benefits associated with the acquisition of approximately $0.85 billion. See Note 9 for further information about the contingent consideration. The purchase price will also be adjusted for net working capital amounts as of the acquisition date compared to targeted amounts set forth in the acquisition agreement. We accounted for the transaction as a business combination. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, primarily in our PBNA segment. The assets acquired and liabilities assumed in Rockstar as of the acquisition date, which primarily include goodwill and other intangible assets of $4.6 billion, are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized. We expect to finalize these amounts as soon as possible, but no later than the second quarter of 2021. In addition to our acquisition of Rockstar, as part of our overall energy strategy, we entered into an agreement with Vital Pharmaceuticals, Inc. in the second quarter of 2020 for us and our bottlers to exclusively distribute Bang Energy drinks in the United States. Acquisition of Hangzhou Haomusi Food Co., Ltd. On June 1, 2020, we acquired all of the outstanding shares of Be & Cheery, one of the largest online snacks companies in China, from Haoxiangni Health Food Co., Ltd. for cash. The total consideration transferred was approximately $0.7 billion. The purchase price will be adjusted for net working capital amounts as of the acquisition date compared to targeted amounts set forth in the acquisition agreement. We accounted for the transaction as a business combination. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the date of acquisition, in our APAC segment. The assets acquired and liabilities assumed in Be & Cheery as of the acquisition date, which primarily include goodwill and other intangible assets of $0.7 billion, are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary values as valuations are finalized. We expect to finalize these amounts as soon as possible, but no later than the third quarter of 2021. Acquisition of SodaStream International Ltd. (SodaStream) On December 5, 2018, we acquired all of the outstanding shares of SodaStream, a manufacturer and distributor of sparkling water makers, for $144.00 per share in cash, in a transaction valued at approximately $3.3 billion. The total consideration transferred was $3.3 billion (or $3.2 billion, net of cash and cash equivalents acquired). The purchase price allocation was finalized in the fourth quarter of 2019. See Note 14 to our consolidated financial statements in our 2019 Form 10-K for further information. Inventory Fair Value Adjustments and Merger and Integration Charges A summary of our inventory fair value adjustments and merger and integration charges is as follows:
| 12 Weeks Ended |  |  |  | 36 Weeks Ended |  |
| 9/5/2020 |  | 9/7/2019 |  | 9/5/2020 |  | 9/7/2019
Cost of sales | $ | 11 |  |  | $ | — |  |  | $ | 30 |  |  | $ | 34 |
Selling, general and administrative expenses | 32 |  |  | 7 |  |  | 256 |  |  | 12 |
Total | $ | 43 |  |  | $ | 7 |  |  | $ | 286 |  |  | $ | 46 |
After-tax amount | $ | 27 |  |  | $ | 6 |  |  | $ | 254 |  |  | $ | 38 |
Net income attributable to PepsiCo per common share | $ | 0.02 |  |  | $ | — |  |  | $ | 0.18 |  |  | $ | 0.03 |
Inventory fair value adjustments and merger and integration charges include fair value adjustments to the acquired inventory included in the acquisition-date balance sheets (recorded in cost of sales) and closing costs, employee-related costs, changes in the fair value of contingent consideration and contract termination costs (recorded in selling, general and administrative expenses). Merger and integration charges also include liabilities to support socioeconomic programs in South Africa (recorded in selling, general and administrative expenses). Inventory fair value adjustments and merger and integration charges by division are as follows:
| 12 Weeks Ended |  |  |  | 36 Weeks Ended |  |  |  |
| 9/5/2020 |  | 9/7/2019 |  | 9/5/2020 |  | 9/7/2019 |  | Acquisition
FLNA | $ | 1 |  |  | $ | — |  |  | $ | 26 |  |  | $ | — |  |  | BFY Brands
PBNA | 17 |  |  | — |  |  | 60 |  |  | — |  |  | Rockstar
Europe | — |  |  | 5 |  |  | — |  |  | 43 |  |  | SodaStream
AMESA | 10 |  |  | 2 |  |  | 169 |  |  | 2 |  |  | Pioneer Foods
APAC | 5 |  |  | — |  |  | 5 |  |  | — |  |  | Be & Cheery
Corporate | 10 |  |  | — |  |  | 26 |  |  | 1 |  |  | Rockstar, SodaStream
Total | $ | 43 |  |  | $ | 7 |  |  | $ | 286 |  |  | $ | 46 |  |  |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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