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PURCHASE, N.Y. — PepsiCo, Inc. today said it has reached a definitive agreement to acquire a majority stake in the South Beach Beverage Company, whose highly innovative SoBe brand has made it one of the industry's most successful companies.

SoBe, whose distinctive logo includes two dueling green lizards, is the fastest growing brand in the rapidly expanding market for non-carbonated alternative beverages. SoBe, which built its business with a highly creative grassroots approach to marketing, offers a wide range of drinks with herbal ingredients.

PepsiCo said that SoBe will be operated as a separate unit and continue to be led by its co-founder and chief executive John Bello (a.k.a. "Lizard King"), who will retain an equity stake in the company. SoBe, which will continue to be based in Norwalk, Conn., will report through Pepsi-Cola North America president and chief executive officer Gary Rodkin.

"SoBe is an extraordinary brand that will be terrific for PepsiCo," said Rodkin. "SoBe enables us to enter the exploding market for new age refreshment. At the same time it will expand our innovation capabilities and strengthen our link with young consumers. And based on the initial popularity of SoBe in several markets outside the U.S., the opportunities for the brand may be truly global."

"We believe that the creative, entrepreneurial SoBe culture will work well alongside Pepsi-Cola Company, which has a long record of innovation and building youthful brands," Rodkin said. "We intend to give SoBe the freedom and autonomy to preserve its unique culture, plus direct access to the advantages of the larger Pepsi-Cola system."

"For SoBe, PepsiCo is the perfect fit," said John Bello, chief executive officer and co-founder of SoBe. "Like Pepsi, SoBe is a special brand that has a special connection with consumers. Pepsi has the talent, resources, energy and commitment to help take SoBe to the next level. It will be a rocket ride. Lizard lovers rejoice!"

The acquisition includes a full range of SoBe products, including fruit blends, energy drinks, dairy-based drinks, exotic teas and other beverages with herbal ingredients.

Pepsi-Cola Company's portfolio of non-carbonated beverages includes: Aquafina, the #1 brand of bottled water; Lipton, the #1 brand of ready-to-drink tea in the United States; Frappuccino, the #1 ready-to-drink coffee beverage; and FruitWorks, a new line of non-carbonated fruit drinks. These brands complement PepsiCo's much larger stable of carbonated soft drink brands, including: Pepsi-Cola, Diet Pepsi, Pepsi ONE, Mountain Dew, Sierra Mist, Slice and Mug.

PepsiCo expects the transaction to be non-dilutive to earnings in 2001 and accretive in 2002.

Terms of the agreement were not disclosed.

J.P. Morgan is serving as advisor to SoBe on the transaction.

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