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Acquisitions & Divestitures (Notes) | 8 Months Ended
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Sep. 04, 2021
Acquisitions & Divestitures [Abstract] |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | Acquisitions and Divestitures 2020 Acquisitions 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 two unsecured bridge loan facilities entered into by one of our international consolidated subsidiaries, which were fully repaid in April 2020. 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 7.8 billion South African rand, or approximately $0.4 billion as of the acquisition date, 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 2.3 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. This commitment was recorded in selling, general and administrative expenses primarily in the year ended December 26, 2020 and is expected to be settled primarily in the fourth quarter of 2021 or early 2022. The remaining commitment of 5.5 billion South African rand, or approximately $0.3 billion as of the acquisition date, relates to capital expenditures and/or business-related costs which will be incurred and recorded over a five-year period from the acquisition date. On April 24, 2020, we acquired Rockstar, an energy drink maker with whom we had a distribution agreement prior to the acquisition, 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 $0.88 billion. See Note 9 for further information about the contingent consideration. 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. We accounted for the 2020 transactions as business combinations. We recognized and measured the identifiable assets acquired and liabilities assumed at their estimated fair values on the respective dates of acquisition. The purchase price allocations for each of the 2020 acquisitions were finalized in the 12 weeks ended June 12, 2021. The fair value of identifiable assets acquired and liabilities assumed in the acquisitions of Pioneer Foods, Rockstar and Be & Cheery and the resulting goodwill as of the respective acquisition dates is summarized as follows:
| Pioneer Foods |  | Rockstar |  | Be & Cheery
Acquisition date | March 23, 2020 |  | April 24, 2020 |  | June 1, 2020
Inventories | $ | 229 |  |  | $ | 52 |  |  | $ | 45 |
Property, plant and equipment | 379 |  |  | 8 |  |  | 60 |
Amortizable intangible assets | 52 |  |  | — |  |  | 98 |
Nonamortizable intangible assets | 183 |  |  | 2,400 |  |  | 309 |
Other assets and liabilities | (53) |  |  | (9) |  |  | (24) |
Net deferred income taxes | (117) |  |  | — |  |  | (99) |
Noncontrolling interest | (5) |  |  | — |  |  | — |
Total identifiable net assets | 668 |  |  | 2,451 |  |  | 389 |
Goodwill | 558 |  |  | 2,278 |  |  | 309 |
Total purchase price | $ | 1,226 |  |  | $ | 4,729 |  |  | $ | 698 |
Goodwill is calculated as the excess of the aggregate of the fair value of the consideration transferred over the fair value of the net assets recognized. The goodwill recorded as part of the acquisition of Pioneer Foods primarily reflects synergies expected to arise from our combined brand portfolios and distribution networks, and is not deductible for tax purposes. All of the goodwill is recorded in the AMESA segment. The goodwill recorded as part of the acquisition of Rockstar primarily represents the value of PepsiCo’s expected new innovation in the energy category and is deductible for tax purposes. All of the goodwill is recorded in the PBNA segment. The goodwill recorded as part of the acquisition of Be & Cheery primarily reflects growth opportunities for PepsiCo as we leverage Be & Cheery’s direct-to-consumer and supply chain capabilities and is not deductible for tax purposes. All of the goodwill is recorded in the APAC segment. Juice Transaction On August 2, 2021, we entered into an agreement with PAI Partners to sell Tropicana, Naked and other select juice brands across North America, and an irrevocable option to sell certain juice businesses in Europe, which will result in combined pre-tax cash proceeds of approximately $3.3 billion while retaining a 39% noncontrolling interest in a newly formed joint venture (Juice Transaction). After the transaction closes, in the United States, PepsiCo will act as the exclusive distributor for the joint venture’s portfolio of brands for small-format and foodservice customers with chilled direct-store-delivery. The purchase price will be adjusted for net working capital and net debt amounts as of the transaction close date compared to targeted amounts set forth in the purchase agreement. The financial statement impacts of the Juice Transaction will be recorded in the PBNA and Europe segments and in corporate unallocated expenses. We have reclassified $1.9 billion of assets, primarily accounts receivable, net, and inventories of $0.7 billion, goodwill and other intangible assets of $0.6 billion and property, plant and equipment of $0.5 billion, and liabilities of $0.8 billion, primarily accounts payable and other liabilities of $0.6 billion and deferred income taxes of $0.2 billion, related to the Juice Transaction as held for sale in our condensed consolidated balance sheet as of September 4, 2021. The Juice Transaction is expected to close in late 2021 or early 2022, subject to customary conditions, including works council consultations and regulatory approvals. The Juice Transaction does not meet the criteria to be classified as discontinued operations. Acquisition and Divestiture-Related Charges A summary of our acquisition and divestiture-related charges is as follows:
| 12 Weeks Ended |  | 36 Weeks Ended
| 9/4/2021 |  | 9/5/2020 |  | 9/4/2021 |  | 9/5/2020
Cost of sales | $ | — |  |  | $ | 11 |  |  | $ | 1 |  |  | $ | 30 |
Selling, general and administrative expenses (a) | (3) |  |  | 32 |  |  | 11 |  |  | 256 |
Total | $ | (3) |  |  | $ | 43 |  |  | $ | 12 |  |  | $ | 286 |
After-tax amount | $ | (2) |  |  | $ | 27 |  |  | $ | 12 |  |  | $ | 254 |
Net income attributable to PepsiCo per common share | $ | — |  |  | $ | (0.02) |  |  | $ | (0.01) |  |  | $ | (0.18) |
(a)The income amount primarily relates to the change in the fair value of contingent consideration associated with our acquisition of Rockstar. Acquisition and divestiture-related charges primarily include fair value adjustments to the acquired inventory included in the acquisition-date balance sheets (recorded in cost of sales), merger and integration charges and costs associated with divestitures (recorded in selling, general and administrative expenses). Merger and integration charges include liabilities to support socioeconomic programs in South Africa, closing costs, employee-related costs, changes in the fair value of contingent consideration, contract termination costs and other integration costs. Acquisition and divestiture-related charges by division are as follows:
| 12 Weeks Ended |  | 36 Weeks Ended |  |
| 9/4/2021 |  | 9/5/2020 |  | 9/4/2021 |  | 9/5/2020 |  | Transaction
FLNA | $ | — |  |  | $ | 1 |  |  | $ | 2 |  |  | $ | 26 |  |  | BFY Brands
PBNA | — |  |  | 17 |  |  | 2 |  |  | 60 |  |  | Rockstar
AMESA | 1 |  |  | 10 |  |  | 8 |  |  | 169 |  |  | Pioneer Foods
APAC | — |  |  | 5 |  |  | 3 |  |  | 5 |  |  | Be & Cheery
Corporate (a) | (4) |  |  | 10 |  |  | (3) |  |  | 26 |  |  | Rockstar, Juice Transaction
Total | $ | (3) |  |  | $ | 43 |  |  | $ | 12 |  |  | $ | 286 |  |  |
(a) Income amounts primarily relate to the change in the fair value of contingent consideration associated with our acquisition of Rockstar.

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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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