Almost a Nestle-Pepsico merger?

“How junk food spoiled megadeal” is how the Wall Street Journal headlined an exclusive story on springtime talks that could have led to a merger of Nestle SA and Pepsico Inc.

Spokespeople for both companies declined to comment, details were scant and the July 19 article relied on unnamed “people familiar with the matter.” Nevertheless, it painted an interesting scenario of a global megagiant, with sales that probably would eclipse $115 billion and a market capitalization in excess of $250 billion. Nestle already is the world’s biggest food company, with 2006 sales of $80 billion (see our Top 100© story).

The Journal story said Pepsico officials made the initial approach. Despite the U.S. firm’s recent commitment to healthier foods, Pepsico’s soft drinks and potato chips were seen as liabilities for a Nestle that is trying even harder to turn itself into a big health food company — despite a big worldwide presence in ice cream. “The effort was ultimately scuttled over a host of complications, according to people familiar with the matter,” the paper reported.

“There are currently no talks about a deal,” the report concluded.

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