PepsiCo to sell Chinese beverage unit to Tingyi

American food and beverage giant PepsiCo is in talks to sell its beverage unit in China to local instant noodle and drinks manufacturer Tingyi Holdings.

In exchange, PepsiCo will get a stake of less than 10% in Tingyi’s beverage unit, with an option to raise it up to 49%.

The deal will help PepsiCo to gain access to Tingyi’s wide distribution network, which includes 544 sales offices across China serving 6,155 wholesalers and 73,282 direct retailers, and to market its beverage products such as Tropicana fruit juice.

Tingyi has a market value of $15bn and reported a net profit of $229.03m for the six months that ended in June 2011.

PepsiCo announced last year that it would invest $2.5bn to expand its food and beverage businesses in China over the next three years.

It also said it would establish ten to 12 facilities in China to produce non-carbonated beverages and snacks, and increase the production capacities at its existing plants.