Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bill Pecoriello - Consumer Edge Research.
Bill Pecoriello - Consumer Edge Research
A question on the proposed transaction. The synergy number seems very low considering the combination of PBG, Pepsi America, the International and duplication with PepsiCo. It seems like you're being conservative there. Could it even be double that?
And second question: As you're changing route to market, things like maybe moving Gatorade, small format DSD or some other brands from DSD to warehouse, is it an obstacle that 25% of the bottling network is still independent and it's a complication changing the distribution format?
Indra Nooyi
Bill, thank you. I'm going to have - Mike White is on the call with us - take this call. Mike do you want to answer this question?
Mike White
Sure. You know, Bill, in terms of the synergies, we've done a fair amount of work over the last 6 or 12 months on the business model as a whole. We clean sheeted and looked at everything. We're quite comfortable that we've set an appropriate set of expectations on synergies.
Clearly, as and when and if we have a deal we recognize we would always communicate with our investors in a good deal more specificity the final numbers that we would expect to get, but we feel quite comfortable that these are deliverable, hard synergies that investors could count on within the first two or three years of the close of the transaction.
So I think that's important to keep in mind.
Indra Nooyi
Bill, let me just add that typically when we do synergy numbers and we report them on the day that we're announcing a transaction we usually report, like we did during the Quaker Oats transaction, synergies that we are very, very comfortable with, and then we start from there and work our way upward because you're right, there should be additional synergies, offset by the fact that procurement is an area where there's usually a lot of synergies; in this case, we already run procurement for our anchor bottlers, so that area is minimized.
Regarding distribution, the opportunities are limitless. We can think about several options for distribution, but we want to be very, very sensitive to the fact that we do have an independent bottling system out there and our goal is to work constructively with the independent bottlers so that all of us can work to expand this profit pool in LRB.
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