PepsiCo plans $15 bn buyback

PepsiCo Inc, the world’s biggest maker of snack food, said it plans to buy back as much as $15 billion in common stock over three years and increased its annual dividend to return cash to investors.

PepsiCo reiterated it will repurchase about $4.4 billion of its shares this year, partly under a 2007 plan that expires in June. The 2007 program had $6.4 billion remaining at the start of the year, the Purchase, New York-based company said today in a statement.

The company suspended share buybacks in 2009 to conserve cash for the purchase of its two largest bottlers, Chief Financial Officer Richard Goodman said on a February 11 conference call. The $7.8 billion acquisition, completed March 1, gives PepsiCo control of about 80 per cent of its North American beverage market and will provide about $400 million annually in savings by 2012, the company said at the time.

“Both the increased dividend and buyback signal management’s confidence in the future,” Jack Russo, an analyst at Edward Jones & Co in St Louis who recommends buying the shares, said in an e-mail. “They obviously feel good about the potential cost savings associated with the bottler deals.”

PepsiCo, also the second-biggest soda maker, rose $1.05, or 1.6 per cent, to $66.15 at 4:15 pm in New York Stock Exchange composite trading. The shares have risen 8.8 per cent this year.

The board approved a dividend increase to $1.92 a share from $1.80. The number of shares of PepsiCo’s common stock outstanding was 1.6 billion as of February 12, according to a company filing.