PepsiCo sues Pepsi Bottling over board meeting

CHICAGO (Reuters) - PepsiCo Inc (PEP.N: Quote, Profile, Research) sued Pepsi Bottling Group (PBG.N: Quote, Profile, Research) and eight directors on Monday, challenging recently enacted anti-takeover measures at the bottler, which it wants to buy.

PepsiCo said that the anti-takeover measures were passed at an invalid board meeting, which was held without the two members representing the soda maker being informed of the date.

The bottling group's board approved the adoption of a stockholder rights plan at the meeting making more difficult and costly for PepsiCo or any unwanted suitor to make a hostile takeover successful.

The suit, filed in the Court of Chancery in Delaware, is seeking to have the meeting and its decisions declared null and void.

"PepsiCo has filed a lawsuit that is entirely without merit in an attempt to divert attention from its grossly inadequate proposal," Pepsi Bottling said.

PepsiCo's two executives who sit on the bottler's board of directors, John Compton and Cynthia Trudell, joined in the lawsuit.

PepsiCo said Pepsi Bottling's board "chose simply not to provide notice to two of its 10 board members (and) convene a secret meeting" to respond to PepsiCo's proposal, rather than calling a full board meeting, where Compton and Trudell could have recused themselves.

PepsiCo filed the suit three weeks after it offered to buy the stakes in Pepsi Bottling and PepsiAmericas (PAS.N: Quote, Profile, Research) that it does not already own. Last week, both Pepsi Bottling and PepsiAmericas rejected PepsiCo's unsolicited takeover bids.

PepsiCo currently owns 33 percent and 43 percent of the outstanding shares of Pepsi Bottling and PepsiAmericas, respectively.