The $6 Billion Pepsi Challenge

Late Sunday soft drinks behemoth PepsiCo (PEP) made a surprise $6 billion bid for two of its biggest bottlers, the Wall Street Journal reports in an exclusive. If successful (and there's no reason to think it won't be as it already owns minority stakes in the two bottling operations), the move would mark a significant strategic shift for Pepsi, signaling "the company's intention to overhaul how it makes and distributes its products to consumers," the newspaper writes. A decade ago, Pepsi jettisoned the bottling businesses off its balance sheet so as to keep the parent company unencumbered to pursue its marketing strategies. Today, the bottling operations are seen as a key asset. "We can accelerate revenue growth and be more agile and flexible," Chairman and Chief Executive Officer Indra Nooyi told the newspaper in explaining the need to reabsorb the businesses. "When you have a flat-to-shrinking profit pool, slicing it 20 ways to Sunday is not the answer."

To be sure, these are generous offers by Pepsi. Pepsi is offering $29.50 in cash and stock for each share of Pepsi Bottling (PBG), valuing the company at about $6.4 billion. It is making a separate offer for PepsiAmericas (PAS), at $23.27 per share, that values that bottler at about $2.9 billion, Bloomberg writes. Nooyi said in a press release quoted by Bloomberg that the acquisitions would enable Pepsi to "unlock cost synergies" and "significantly improve our competitiveness and growth prospects."

There are yet more encouraging signs for the state of America's banks. The New York Times leads off its business coverage today saying the Obama administration can shore up the banking system for now without having to tap Congress for more taxpayer bailout funds. "In a significant shift," the newspaper writes, "White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock." There are some downsides to the plan, though. Such an equity conversion would mean the government would take a larger stake in the banks. Critics would probably consider such a move "a back door to nationalization," the NYT points out.

And now for some not-so-good news with the banking sector. The WSJ publishes today its analysis of bank lending, and the numbers don't look good. "Lending at the biggest U.S. banks has fallen more sharply than realized, despite government efforts to pump billions of dollars into the financial sector," the newspaper writes. Using February figures, the newspaper shows that banks again loaned out less than they did before the TARP money came flowing in. In fact, "loans declined in three of the four months" since the bailout went into effect. Looking overseas now, the Financial Times reports this morning that UBS has sold its Brazilian financial services business for about $2.5 billion, a sorely needed capital boost for the Swiss banking giant that's been rocked by the credit crisis.

Having brought turmoil upon the world's financial markets, AIG (AIG) seems to be undergoing a little internal shakeup of its own. The WSJ reports that the mega insurer is set to delay by a few days the filing of its annual proxy statement while it reshuffles and expands its 11-member board. The need to accommodate three new government-appointed trustees is at the center of the reshuffle. "The American International Group board is accountable mostly to the trustees but also to the other shareholders owning a remaining stake that is slightly more than 20%," notes the WSJ. And who are these three upholders of the public's stake in AIG? They are "a retired Wall Street executive, the head of a Texas pipeline company and the chairwoman of a firm in Bermuda that provides administrative services to hedge funds," writes the NYT. Yet for all their voting power (they would oversee 80 percent of AIG shares), the trustees "have said nothing in public about their activities or their plans."

Their role will be put under intense scrutiny next month at AIG's annual shareholder meeting, where dissident shareholders are likely to table motions—including further cutting executive pay—that the Treasury Department is likely to oppose. "That could leave the trustees, who are each being paid $100,000 a year, in the awkward position of having to vote on a proposal that many taxpayers might support but that the government opposes," writes the NYT.

Exxon Mobil (XOM) is back at the top of Fortune's benchmark list of the United States' best-performing companies in a year where many of the supposed industrial and financial heavyweights tanked. 2008 was a good year for Exxon because, as Fortune explains, not only was it displaced by the banks as corporate enemy No. 1 but it also proved "perfectly capable of making billions of dollars even with oil at $50 a barrel or less."

From Big Oil to Big Pharma now: GlaxoSmithKline (GSK) is to buy Stiefel Industries for $2.9 billion in "a deal that continues a wave of acquisitions in the drug industry," writes the WSJ.

Finally, automakers are having to scour the world for any signs of optimism, and Porsche believes it has identified a new growth opportunity in China. The German automaker unveiled a new sedan, the Panamera, at the Shanghai auto show—the "latest confirmation of the importance of the Chinese auto market," notes the NYT, and further confirmation that ridiculous-sounding car names are not just reserved for the U.S. and Euro markets.