PEPSICO AND
QUAKER COMPLETE THEIR MERGER,
FORMING FIFTH-LARGEST FOOD AND BEVERAGE CO.

Product Portfolio Now Includes

13 Brands That Each Generate

$1 Billion or More in Retail Sales


PURCHASE, N.Y., Aug. 2, 2001 — PepsiCo said today it has completed its merger with The Quaker Oats Company, creating a $25 billion
food and beverage company sharply focused on the rapidly growing consumer demand for convenience.

“This is an historic
day for PepsiCo,” said Steve Reinemund, PepsiCo chairman and chief
executive officer. “Since this merger was announced in December, we’ve
been making plans to build a truly outstanding company that’s perfectly
positioned to build on the many opportunities we see for convenient foods and
beverages. We are now well prepared to make that dream a reality.” 

The merger combines two
strong, highly complementary businesses to form the world’s fifth-largest
food and beverage company, ranked by revenues. With the merger complete, PepsiCo
generates $25 billion in pro-forma annual revenues and owns 13 consumer brands
that each post more than $1 billion in annual retail sales. 

“Quaker brings to
PepsiCo a very wide range of benefits that touch virtually every one of our
businesses,” Reinemund said. “With Gatorade, we’ll add the
leading isotonic brand to our beverage portfolio. Quaker’s highly-efficient
broker-warehouse system will help Tropicana accelerate national distribution and
growth of its shelf stable products. The Quaker brand and the company’s
line of wholesome snacks give us a ideal way to expand beyond salty snacks. And
bringing our companies together will create literally hundreds of millions of
dollars in purchasing, manufacturing and distribution synergies.” 

“We are particularly
fortunate to have the benefit of the Quaker leadership team,” Reinemund
said. “I believe Quaker’s leaders will enhance PepsiCo’s
management strength significantly.” 

Under terms of the merger,
Quaker shareholders will receive 2.3 shares of PepsiCo common stock in exchange
for each share of Quaker common stock they own. Based on the number of Quaker
shares outstanding yesterday, PepsiCo expects to issue approximately 306 million
additional shares of its common stock to Quaker shareholders. PepsiCo
shareholders will continue to own their existing shares of PepsiCo common stock.
Shares of the combined company, which is known as PepsiCo, will be traded on the
New York Stock Exchange and the Chicago Stock Exchange under the symbol
“PEP”. 



PepsiCo also announced it will provide additional merger-related information on the company over the next
two weeks:


 •
 
Pro-forma restated financial statements combining PepsiCo and
Quaker will be posted on PepsiCo’s website by the end of Wednesday August 8.



 •
 
A “tutorial” presentation to review the restated historical
financial statements will be webcast Friday August 10 at 10AM (Eastern time). 


 •
 A presentation by PepsiCo senior executives Steve Reinemund, Indra Nooyi
and Bob Morrison will be webcast on Monday August 13 at 9AM.





The webcasts will be accessible thorough PepsiCo's website, www.pepsico.com, and will be archived for 90 days and available for
replay at www.ccbn.com.

PepsiCo and Quaker announced their merger plans on Dec. 4, 2000.  The Federal Trade Commission yesterday provided the final
regulatory clearance required for the merger.

PepsiCo brands that each
generate $1 billion or more in annual retail sales will now include: Pepsi,
Mountain Dew, Diet Pepsi, Lay’s potato chips, Gatorade, Tropicana Pure
Premium, Doritos, Quaker, Ruffles, 7UP (outside the U.S.), Cheetos, Mirinda and
Lipton Teas. 

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