Tropicana was put up for sale by its owners Seagram in order to raise money to purchase the record company Polygram.

It was originally planning a stock market offering for the company, but got a better deal by making a private sale.

The deal gives Pepsi the market leader in fresh, not from concentrate, orange juice, with a 70% share.

Tropicana's $2bn annual sales include products like Twisters and Dole juices. Rival Coca-Cola's Minute Maid division is the second largest orange juice company.

But Pepsi's combined sales of $12.5bn after the deal would still lag behind Coca-Cola's annual sales of $18.9bn.

Pepsi has been pursuing a broad-based strategy of building up a snacks and fast-food business to rival Coke.

The snack division, Frito-Lay, produces potato chips like Ruffles and Doritos.

It floated off its fast food division, which includes Kentucky Fried Chicken, Pizza Hut, and Taco Bell, into a separate company last year.

Move to music

Seagram, a privately-held Canadian company, has been moving from drinks to entertainment.

While the company still owns brands like Absolut Vodka and Chivas Regal whisky, its focus was changed by the purchase of Universal Studies for $5.7bn in 1995.