November 7 -- Taiwanese instant noodle and drink manufacturer Tingyi (Cayman Islands) Holding (0322.HK) said it concluded an agreement with U.S. soft drinks giant Pepsi to establish a strategic alliance in China, reports yicai.com, citing a company filing after the Hong Kong market closed on Friday.

According to the agreement, Pepsi will transfer the entire equity stake of its non-alcoholic beverage bottling business to Tingyi-Asahi Beverages (TAB), an affiliaite of Tingyi Holding, in exchange for a 9.5 percent stake in the latter’s domestic beverage business.

FEB, a wholly-controlled subsidiary of Pepsi, will thus obtain a 9.5 percent stake in TAB, while Tingyi Holding will own a 90.5 percent stake in TAB. FEB will indirectly hold a five percent stake in TAB, and be granted the option of increasing its indirect stake in TAB to 20 percent on a fully diluted basis.

Under the terms of this agreement, Pepsi will appoint TAB as its sole franchise bottler, and TAB will work together with Pepsi Bottlers to exclusively produce, package, install, distribute, and sell Pepsi’s soda drinks in China.

In addition, Pepsi gave TAB the rights to be the sole manufacturer and distributor of sports drink Gatorade, the exclusive producer and distributor of the Tropicana juice brand, and the non-exclusive rights to manufacture, distribute and promote the Aquafina brand of bottled water.

Tingyi Holding expects the alliance to accelerate the launch of innovative products, improve efficiency, and reduce costs. It will provide localized services for Pepsi’s network of local retailers and clients, and help to expand the domestic distribution network of Pepsi’s soda and non-soda products.

Shares of Tingyi Island were suspended from trading last Friday. Share trading resumed today, and the stock rose 8.41 percent to trade at HK$22.55 per share at 13:58.