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— Dealmakers —
After and an arduous campaign, PepsiCo Inc. (NYSE:PEP) finally consolidated its two largest bottling companies in a $7.8 billion cash-and-stock deal, announced Aug. 4. Purchase, N.Y.-based PepsiCo said...it has a deal in place to acquire the shares it does not already own in Somers, N.Y.-based Pepsi Bottling Group Inc. for $36.50 per share and the smaller PepsiAmericas Inc. of Minneapolis for $28.50 per share, a boost from the $29.50 per share and $23.27 per share price Pepsi offered in April. If closed in late 2009 or early 2010, as expected, the deals would give Pepsi control of about 80% of its North America beverage volume. (Subscribers to The Deal Pipeline can read the full story here) See more on Pepsi's activity below. Meanwhile, the company has also been busy on the M&A front -- furthering its global ambitions and building out its health and wellness brands.
2009 Oct. 19: Coca-Cola Co. earnings preview: Analysts expect the Atlanta-based soda company to report a profit of 81
cents per share and revenue of $8.12 billion for the quarter, according
to Thomson Reuters; that would be in line with what Coke earned per
share in the year-ago period. - Gerald Magpily Oct. 14: PepsiCo and Anheuser team up to cut costs?: It's true. PepsiCo Inc. (NYSE:PEP) and Anheuser-Busch InBev SA (NYSE:BUD) will purchase goods and services together -- "effectively managing costs that can be reinvested back into areas that will grow their businesses." Many corporate giants have restructured their businesses to cut costs and invest in growth areas, but this agreement is pretty interesting since it's usually done by small companies. - Baz Hiralal Oct. 12: Investors confident on Pepsi bottling deal: PepsiCo Inc. refiled for U.S. regulatory approval for its deals to take control of its major bottling companies, but risk arbitrageurs seem confident that the regulatory process will not stall the transactions. After several months of negotiation, PepsiCo announced in early August mergers with its largest manufacturer and distribution company, Pepsi Bottling Group Inc., and its second largest, PepsiAmericas Inc. Both deals involve cash and stock subject to shareholder elections and proration. - Scott Stuart Oct. 8: Pepsi's profits surge on cost cuts, M&A: PepsiCo reported net income increased 9% to $1.72 billion, or $1.09 a share, beating Thomson Reuters forecast of $1.03 per share. The company was able to lower production costs by 1.7% and administrative expenses by 8.1% as well as increase international sales attributed to acquisitions in Europe such as its purchases of a 75.5% stake in the Russian juice producer OAO Lebedyansky and Sandora LLC in the Ukraine. (Subscribers to The Deal Pipeline may read more here.) - Gerald Magpily Oct. 7: Earnings preview: PepsiCo: PepsiCo Inc. (NYSE:PEP) will announce third-quarter earnings on Thursday at 7 a.m. ET. Analysts expect the food and beverage company to announce earnings of $1.02 per share on revenue of $11.26 billion, according to Thomson Reuters. Those numbers are slightly higher than the $1.01 per share earnings and revenue of $11.24 billion in the same quarter last year. - Gerald Magpily Oct. 5: PepsiCo names Eric Foss CEO of bottling unit: Eric Foss, chairman and CEO of PBG, the world's largest bottler of PepsiCo beverages, will become CEO of the new bottling unit, which will comprise all current PBG and PAS operations in the U.S., Canada and Mexico. - Baz Hiralal Sept. 23: O.N.E. deal brings Pepsi and PE together: New York-based coconut water beverage company Vita Coco recently spurned multimillion-dollar investment proposals from PepsiCo Inc. (NYSE:PEP) and Coca-Cola Co. (NYSE:KO). While Coke hooked up with competitor Zico Beverages LLC, we naturally suggested Pepsi could look at competitor One Natural Experience, or O.N.E. A day later, Pepsi Bottling Group Inc. (NYSE:PBG) said it teamed up with private equity firm Catterton Partners and signed a distribution deal with O.N.E. in Southern California and South Florida. PBG and Catterton also made equity investments in the four-year-old beverage company but did not say how much. - Baz Hiralal Sept. 21: Vita Coco snubs Coke, Pepsi: Keep your millions, our coconuts have staying power. That seems to be the sentiment of Michael Kirban, founder of coconut water beverage company Vita Coco. The New York Post reported that Kirban recently turned down multimillion-dollar investments from Coca-Cola Co. (NYSE:KO) and PepsiCo Inc. (NYSE:PEP). - Baz Hiralal Sept. 21: Bottling integration on track, says parting Pepsi exec: Pepsi Bottling Group Inc. and Pepsi Americas Inc. were spun out of PepsiCo Inc. (NYSE:PEP) 10 years ago. Now Pepsi is buying them back
in a $7.8 billion deal expected to close early next year. Will the
fact that the units were once part of the parent make it easier to fold
them back in? Aug. 14: PepsiCo to purchase Brazilian coconut water companies: PepsiCo Inc. announced Wednesday, Aug. 12, that it had agreed to acquire Brazilian coconut water companies Amacoco Nordeste Ltda. and Amacoco Sudeste Ltda. Terms were not disclosed. - Demitri Diakantonis Aug. 4: PepsiCo agrees to $7.8B deal with bottlers (subscription only): After months of wrangling, PepsiCo Inc. has secured a deal to acquire its two largest bottling companies for a combined value of $7.8 billion in stock and cash. PepsiCo on Tuesday said it would acquire the shares it does not already own in Pepsi Bottling Group Inc. of Somers, N.Y., for $36.50 per share and the smaller PepsiAmericas Inc.
of Minneapolis for $28.50 per share. The agreed-to prices are a boost
from the $29.50 per share and $23.27 per share originally offered. - Lou Whiteman July 8: Pepsi earnings put merger in doubt: Wall Street underestimated Pepsi Bottling Group Inc.
(NYSE:PBG), which said second-quarter profit rose 21% on a tax gain and
slower declines in Canada and the U.S. On the flip side, though, its
revenue missed Street expectations. If PBG can keep up its positive momentum, PepsiCo Inc. will have a hard time convincing its biggest bottler that its $6 billion cash-and-stock offer is the best deal it is going to get. - Baz Hiralal July 7: Coca-Cola, TPG and China's M&A climate: Three months after China batted down Coca-Cola Co.'s $2.4 billion bid for China Huiyuan Juice Group Ltd.,
people are still speculating about what it means for M&A in the
country. U.S. Federal Trade Commissioner William E. Kovacic is the
latest to weigh in. Speaking to reporters in Beijing, Kovacic, via Reuters,
said he believed Chinese officials acted professionally in denying
Coca-Cola's bid in March and that he has "a high degree of confidence
that the reasons for their analysis are based on their neutral
assessment of competitive effects." - Suzanne Stevens July 6: Pepsi investing another $1B in Russia: PepsiCo Inc. chairman and CEO Indra Nooyi is in Russia this week with U.S. President Obama -- and other corporate execs -- to increase business ties
between the nations. As part of this week's visit, Nooyi is opening a
bottling plant outside Moscow and says Purchase, N.Y.-based Pepsi plans
to open a snacks manufacturing plant later this year in the southern
city of Azov and will invest $1 billion in Russia over the next three
years. PepsiCo made the announcement with Pepsi Bottling Group Inc., which it tried to acquire earlier the year. The latest investment announcement will bring PepsiCo's and PBG's cumulative investment in Russia to over $4 billion. - Baz Hiralal June 3: Pepsi Deal Bubbles (subscription required): Pepsi Bottling Group Inc. shares slipped slightly Wednesday amid jousting between the company and PepsiCo Inc. over potential synergies from the proposed combination of PepsiCo, Pepsi Bottling and PepsiAmericas Inc. With its increased guidance for the second quarter and full year for 2009, Pepsi Bottling presented its case on a conference call Tuesday for more than the nominal $29.50 per share, or $6.4 billion, that PepsiCo offered in April for the 60% it does not own of the larger of the two independent bottlers. - Scott Staurt May 18: PepsiAmericas creates joint venture: Minneapolis-based PepsiAmericas Inc. (NYSE:PAS), fighting a takeover attempt by PepsiCo Inc. (NYSE:PEP), will launch a joint venture with Central America Beverage Corp. The
deal is to combine PepsiAmericas' Caribbean business, excluding the
Bahamas, with CanCorp's Central American operations, including
Guatemala, Honduras, El Salvador and Nicaragua. CabCorp will own 82% of
the JV. Closing of the transaction is subject to certain regulatory
approvals. CabCorp bills itself as the 12th-largest company in Central America with sales of $480 million in 2008. - Baz Hiralal May 15: Pepsi Bottling acquires another bottler: Pepsi Bottling Group Inc. (NYSE:PBG), the subject of a takeover attempt by PepsiCo Inc., is acquiring 50-year-old Haverhill, Mass.-based Pepsi-Cola
Bottlers. Despite fighting a takeover bid, PBG feels it's business as
usual as it pursues its growth strategy. - Baz Hiralal May 11: Pepsi sues over secret meeting: Instead of raising its $6 billion cash-and-stock bid for its two biggest bottlers, PepsiCo Inc. filed suit in Delaware against Pepsi Bottling Group Inc. and certain of its directors. The suit claims
the bottling group's board kept Pepsi in the dark about a meeting where
it adopted a poison pill, made new executive compensation arrangements
and changed PBG bylaws. - Baz Hiralal May 5: Davis Polk swigs more Pepsi (suubscription required): A decade ago, Davis Polk & Wardwell and Merrill Lynch & Co. advised PepsiCo Inc.
on its $2.3 billion spinoff of Pepsi Bottling Group Inc. The law firm
and investment bank, since Jan. 1 a unit of Bank of America Corp., are
working with PepsiCo as it tries to buy back Pepsi Bottling Group, as well as No. 2 bottler PepsiAmericas Inc. George Bason Jr. and John Bick lead Davis Polk's team on the deal. PepsiCo owns about 33% of PBG and 43% of PepsiAmericas. May 7: PepsiAmericas rejects PepsiCo's offer (subscription required): PepsiAmericas Inc. is treading the same path as fellow bottler Pepsi Bottling Group Inc. by rejecting PepsiCo Inc.'s $1.7 billion offer to buy the shares of the company it doesn't already own. Both bottlers said PepsiCo's bid is not in the best interests of shareholders. PepsiCo's
per-share offer of $11.64 in cash and 0.223 of a Pepsi share for nearly
60% of PepsiAmericas and its $6 billion offer for Pepsi Bottling would
give the parent company better control of its two biggest bottlers and
cut costs. - Donna Block May 7: Pepsi may pay more for synergies: Barring other tactics, PepsiCo Inc. (NYSE:PEP) will need to raise its $6 billion cash-and-stock bid for its two biggest bottlers. The transactions committee at PepsiAmericas Inc. followed suit with the special committee at larger Pepsi Bottling Group Inc., saying the offer "significantly undervalues the strategic benefits of system consolidation." The bottler, which posted sales of $4.8 billion in 2008, also pointed to its first-quarter results
as evidence of its strength. PepsiAmericas is playing a little hardball
as well, extending its shareholder rights plan by a year to May 20,
2010. - Baz Hiralal May 4: Pepsi Bottling rejects PepsiCo bid (subscription required): Pepsi Bottling Group Inc.'s board on Monday rejected as "grossly inadequate" PepsiCo Inc.'s $6 billion cash-and-stock offer to acquire all outstanding shares of the bottler it doesn't already own. Rejection of the proposal comes nearly two weeks after PepsiCo offered to buy the remaining stakes in its two largest bottlers, Pepsi Bottling Group and PepsiAmericas Inc. in an attempt to secure more control of its distribution and cut costs. - Donna Block April 23: Coke may buy Huiyuan Juice stake: In March, citing a possible deterioration of competition, China's Ministry of Commerce blocked Coca-Cola Co.'s $2.4 billion bid for China Huiyuan Juice Group Ltd., the country's No. 1 juice maker. That left Huiyuan looking for partners and Coke might just be that partner. The
Wall Street Journal, citing unnamed sources, said Coke is considering a
range of options in hopes of striking a deal that will satisfy Chinese
regulators, including taking a minority stake in Huiyuan, which is is
23%-owned by France's Groupe Danone SA. - Baz Hiralal April 22: Coke CEO: 'Our business was built for times like these': As its earnings report showed a 10% drop in net income for the first quarter, Coca-Cola Co.'s president and chief executive Muhtar Kent is very confident
about the beverage giant's position in the global economic downturn.
And with the $2.4 billion it has after a failed bid for China Huiyuan Juice Group Ltd., Coke may look for other deals or even buy back shares. Kent
said in a note to investors, "We again exceeded our long-term profit
target and delivered solid volume results. Importantly, in many
worldwide markets, we outperformed the nonalcoholic ready-to-drink
industry. ... Our business was built for times like these." - Baz Hiralal April 21: Investors await higher bids for Pepsi bottlers (subscription required): Shares of PepsiAmericas Inc. and Pepsi Bottling Group Inc. have been bid up well over the buy-in offer from PepsiCo Inc. PepsiCo. moved Sunday with separate offers to buy in its two main North American
bottling companies that manufacture and distribute Pepsi and other soda
and non-soda products for the food and beverage company. PepsiCo owns
about 43% of PepsiAmericas and 33% of Pepsi Bottling. - Scott Staurt April 17: PepsiCo bags Peru's Karinto: PepsiCo announced April 17 that it has acquired Peruvian snack maker Karinto SAC, which sells corn-based snacks, nuts, seeds and raisins. The snack and beverage giant said the deal is part of a long-term strategy to develop operations in South America and expand into health snacks. - Thomas Zadvydas To that end, Nov. 24, PepsiCo and Strauss Group expand Sabra JV: PepsiCo and partner Strauss Group will open a state-of-the-art manufacturing facility in Virgina to accelerate North American distribution of Sabra dips through their joint venture. Sabra Dipping Co. was formed in March to capitalize on the popularity of Sabra products, namely its hummus dip. The JV is part of PepsiCo's effort to gain market share in the healthy snack and drink category.
BACK ON THE BOTTLING FRONT Sept. 25, 2008: Pepsi Bottling gets Colorado's Lane: Pepsi Bottling Group said it signed a letter of intent to acquire Colorado Springs, Colo., counterpart Lane Affiliated Cos. for undisclosed terms, in a deal expected to be completed by the end of the fourth quarter. - Demitri DiakantonisMay 8, 2002: Pepsi Bottling continues global rollup: Pepsi Bottling Group's agreement to pay 11.9 billion pesos ($1.25 billion) to purchase 100% of Mexico's second-biggest bottler, Pepsi-Gemex SA, is its latest gambit to grow globally through acquisitions. It's also eyeing bottling company prospects in the U.K., Portugal, the Philippines, Thailand and Vietnam, said Kelly McAndrew, a spokeswoman for Somers, N.Y.-based Pepsi Bottling. In its most recent buy, Pepsi Bottling paid $100 million for the rights to distribute Pepsi products in Turkey. - Daniel J. McCosh and Katie Anderson Aug. 21, 2000: Pepsi bottlers agree to merge: Encouraging consolidation among its bottlers, PepsiCo is supporting a merger between its second- and third-largest operators. The cola giant signed off on a deal under which the No. 2 Pepsi bottler, Whitman Corp., will acquire its nearest competitor, PepsiAmericas Inc. for $661 million, including debt. PepsiCo is encouraging its approximately 130 bottlers to merge so they can deal more effectively with big retailers such as Wal-Mart Stores Inc., said John Bierbaum, PepsiAmericas' CFO. - Josh Kosman GLOBAL AMBITIONS In late 2007, PepsiCo said it would reorganize, dividing its U.S. food and beverage operations into two units and creating a separate unit for most international assets, a structure, The Deal's Matthew Wurtzel noted, that could make for easier acquisitions. Consider its then-latest deals: August 14, 2007: PepsiCo's march into Russia: PepsiCo reportedly bought into Russia's biggest juice maker, OAO Lebedyansky, according to the Kommersant daily. The deal came months after PepsiAmericas and PepsiCo announced a joint acquisition of 80% of Ukraine juice company Sandora LLC for $542 million plus assumed debt. On the snack side, PepsiCo is expanding its manufacturing presence in Russia. The company already operates a $160 million factory and in June announced it would spend $170 million over five years to build a second manufacturing facility in Russia.
PRESENT AT THE TRANSFORMATION June 24, 2002: The Deal's Matt Miller explained PepsiCo dealmaker, now CEO "Indra Nooyi has been essential in the transformation of PepsiCo Inc." See her role in: the 1997 spinoff of fast-food chains, including Pizza Hut, Taco Bell and KFC, and the company's restaurant distribution operations; the 1999 maneuver to sell off through an IPO nearly 60% of Pepsi Bottling Group, netting the company nearly $2.2 billion; the 1998 acquisition of Tropicana; and of course the 2000 Quaker deal: "[W]hat particularly impressed the financial community was Nooyi's disciplined negotiating stance. PepsiCo approached Quaker in October 2000 about a merger. Quaker agreed, but wanted a collar that would have increased the share ratio if PepsiCo shares declined before the merger was completed. Nooyi and PepsiCo refused. According to various sources, she held fast even though it meant the original merger negotiations collapsed in early November 2000. "Both Coca-Cola and Groupe Danone entered the fray. Coca-Cola and Quaker agreed, only to see Coke's board reject the merger. Danone tried. Its stock price fell on the news, and it dropped out. Nooyi re-entered negotiations but again refused to consider a collar and also insisted on a cap on the value of PepsiCo shares. Quaker was left only with a termination right. The two companies announced the merger in December. It was completed in May 2001." - Matt Miller The acquisition, wrote Deal contributor Adam H. Ismail in August 2001, transformed the "century-old purveyor of snack foods into a major health brand." LIGHT MY FIRE And somewhere along the way, a fire was lit under long-time arch rival Coca-Cola Co. Nov. 19, 2001: New Coke: "It has finally started to happen: Coca-Cola Co., is responding to intense pressure from Wall Street to become more active in the new-age beverage category. It acquired Odwalla Inc. of Half Moon Bay, Calif., earlier this month for $181 million. ... Wall Street analysts have stepped up pressure on Coke to make things happen with health beverages because they view the high-growth category as a logical extension for beverage players. "And until now, PepsiCo Inc. has seemingly frustrated Coke at every turn. First there was the SoBe deal, in which Coke was in final discussions with the South Beach Beverage Co., only for Pepsi to beat it out at the last minute. Then there was the Quaker Oats Co. acquisition that would have given Coke the rights to Gatorade - but again Pepsi walked away with the company. Throw the failed P&G joint venture into the mix, and it makes the very able Coke management team seem as though it is stumbling around in the dark. The Odwalla acquisition gave Coke the opportunity it needed, its first chance in more than a year to show Wall Street its strong and sound strategy." - Deal contributor Adam H. Ismail FAST FORWARD Feb. 18, 2008: Coke's strategies (including noncarb deals) show results: Coca-Cola beat analyst expectations fueled by soda sales in the emerging markets, a weak dollar and the noncarb drinks it has added in response to slumping U.S. consumption of carbonated beverages. Atlanta's Coke has made considerable gains on PepsiCo and Nestle SA in the noncarb arena. Recently, Coke took a 40% stake in Honest Tea Inc., a maker of certified organic beverages, for about $43 million, with the option to buy up the whole company in the future. You can add that to their $4.1 billion acquisition of Glaceau last May. (And a 2007 deal for FUZE Beverage.) In Australia, Coca-Cola Amatil Ltd., which posted a 10% annual profit increase, launched Glaceau Vitaminwater. CCA bottles and distributes Coke's soft drinks in several countries. Bloomberg reported that PepsiCo had a 17% increase in fourth-quarter sales to $12.3 billion on gains from Gatorade and Lipton bottled tea in the U.S. and Doritos snacks in China and India. PepsiCo recently launched Sobe Life Water, which they showcased in a well-received Super Bowl ad. Over in Europe, though, Coke was an official sponsor of the 2008 UEFA European Football Championship, or Euro 2008, where it marketed the low-cal Coke Zero. - Baz Hiralal Nov. 13, 2002: Coke plans Indian IPO More recently, April 16: Coke deal blocked, Huiyuan looks for partners: China's Ministry of Commerce blocked Coca-Cola Co'.s (NYSE:KO) $2.4 billion bid for China Huiyuan Juice Group Ltd., the country's No. 1 juice maker. Authorities cited a possible deterioration of competition. That leaves Huiyuan still looking for partners, and it says several parties are interested in a deal. One media outlet named Taiwan Uni-President, PepsiCo, China Resources Enterprise and Cofco Ltd., China's largest diversified products and services supplier, as possible partners. Another, it seems, is Coke itself. - Baz Hiralal Feb. 14, 2006: Thanks for nothing: Coca-Cola said Tuesday that two of its directors would not seek re-election to the company's board. Leaving was J. Pedro Reinhard, who is a former executive at Dow Chemical Co., and Warren Buffett, who is, like, Warren Freakin' Buffett! Buffett has served on the soft-drink maker's board since 1989, and Reuters pointed out that its stock price was 6 times higher than when he joined. But Buffett is also known for having quashed Coke's $15 billion bid for Quaker Oats in 2000. PepsiCo eventually won the company and its top-selling Gatorade sports drink. The Quaker business has propelled a remarkable resurgence at Pepsi, while Coke is struggling. Buffett may be, like, WFB!, but Coke can get that kind of advice by watching "Kudlow & Company." - Jeffrey Kanige AND THEN THERE'S CADBURY Jan. 2, 2001: Soda giants forsake bubbles for growth: For the three big beverage companies -- Coca-Cola, PepsiCo and Cadbury-Schweppes plc -- 2000 was a year of forays into the world of nonfizzy drinks. See Pepsi-Quaker, Pepsi-South Beach Beverage Co., Cadbury Schweppes-Snapple, Danone SA-McKesson Water Products Co. - Soma Biswas The next year, Cadbury buys Pernod Ricard's soft drinks unit: British drinks and confectionery maker Cadbury Schweppes Sept. 21, 2001, ended months of talks to buy Pernod Ricard SA's soft drinks businesses in Continental Europe, North America and Australia. Terms of the deal, as announced in June, called for Cadbury to pay €700 million ($649 million) for the businesses, which include Orangina soda and Yoo-Hoo chocolate-milk drink. - Laura Board And four years after that, the company staged an LBO: Cadbury drinks unit in LBO: London-based confectioner Cadbury Schweppes plc agreed Nov. 21 to sell Schweppes, Orangina and its other European soft drinks brands to Lion Capital LLP of London and New York's Blackstone Group LP for €1.85 billion ($2.2 billion). - Jonathan Braude Cadbury Schweppes then split off its U.S. drinks business, Dr Pepper Snapple Group Inc., to the public in 2008 and kept its confectioner business Cadbury plc. For more, see a related Dealwatch. Feb. 10: Peltz singles out Dr Pepper bottler: Meanwhile, activist investor Nelson Peltz is back at it. He wants Dr Pepper Snapple Group Inc. to sell off its bottling division, but will he soften his stance if there are no takers? Peltz's Trian Fund Management LP revealed Dec. 12 that it had more than doubled its stake in Plano, Texas-based Dr Pepper to 7.2%, making it the company's second-largest shareholder. Trian intends to take an active role in company strategy, and Peltz has already met with Dr Pepper management to express his belief that the company is undervalued, largely because of its underperforming bottling division. - Francesca Levy AND THEN THERE'S OCEAN SPRAY ... Nov. 26, 2008: Business-model lessons from the cranberry bog: Lakeville, Mass.-based Ocean Spray is a co-operative, formed in 1930 by three cranberry growers and led by cranberry lawyer Marcus L. Urann. It has since grown into a billion-dollar operation with over 750 growers in the U.S. and Canada. ... It has also been the subject of merger speculation. PepsiCo or Coca Cola, thirsty for juice businesses, would probably still love to own it. They had a shot at the turn of the millennium, but growers voted against a sale even as low cranberry prices battered the company. Five years ago, Ocean Spray hired Morgan Stanley to consider offers for the business. But it remained independent after shuffling a number of CEOs. - Baz Hiralal AND BACK WHERE IT ALL BEGINS June 16, 1903: This date in deal history: Pepsi introduced: North Carolina pharmacist Caleb Bradham trademarks a new name for his stomach pain remedy. Bradham calls his concoction Pepsi-Cola, deriving the moniker from "dyspepsia" -- the medical term for "puking your guts out." Pepsi sales grew rapidly, but the brand remained a perennial runner-up to Coke, as consumers usually prefer to ingest their refreshments through the nose. Recently, however, after a series of shrewd acquisitions by PepsiCo, Wall Street now prefers Bradham's creation to archrival Coca-Cola. Both companies, though, are facing a stiff challenge from a new entrant into the battle to fill America's straws -- Crystal Metha-Cola. - Jeffrey Kanige Visit the complete Dealwatch Archive |
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