Ending a nearly four-month-long impasse, PepsiCo Inc. (PEP) announced a sweetened $7.8 billion deal to buy its two largest bottlers in a push to revive its North American beverage business that has been fighting a slump in sales.

PepsiCo sweetened its April offer considerably, saying it will pay $36.50 in cash and stock for the each share of Pepsi Bottling Group Inc. (PBG) it doesn't already own, well above its original bid of $29.50 a share. The cash and stock price for PepsiAmericas Inc. (PAS) was raised to $28.50 a share from $23.27 a share.

Shares of the beverage and snacks giant and the bottlers' stocks surged on the news. Since the first announcement of the bid in April, there have been few indications from any of the three companies on whether the deals would finally go through and at what price. Tuesday's announcement removed the uncertainty that PepsiCo investors had been facing and the sweetened prices for the bottlers were largely in line with what several analysts had predicted. PepsiCo also said the deal would give it annual pre-tax savings, or synergies, of $300 million by 2012, higher that its original forecast. Still, investors and analysts said that PepsiCo might be able to wring out even more savings than its latest estimate.

"I'm glad its done," said Walter Todd, a portfolio manager of Greenwood Capital, which holds PepsiCo shares. "I think PepsiCo is lowballing the synergies." PepsiCo shares were recently up 5.4% to $59.23.

PepsiCo had widely been expected to sweeten its bid, but investors were uncertain about how high the beverage maker would go and couldn't discount the possibility that PepsiCo could walk away from the deal. In recent months amid that uncertainty, shares of both bottlers traded well above the price of Pepsi's original bid but didn't hit the levels that analysts predicted. Shares of both bottlers rose further on Tuesday coming in line with PepsiCo's announced deal price. Pepsi Bottling's stock was recently up 8.3% to $36.40, and shares of Pepsi Americas gained 8.7% to $28.42.

"The price is in line with our expectations... We think getting the deal done removes a big overhang on PepsiCo," said JPMorgan analyst John Faucher in a research brief.

The deal will allow PepsiCo to control 80% of its North American beverage distribution, a move the company has said would allow it to cut costs as the region's soda sales have been stagnating.

PepsiCo Chief Executive Indra Nooyi said while the company has had a constructive partnership with the bottlers for the past decade, changes in the North American beverage industry "demand that we create a more flexible, efficient and competitive system that can drive growth" of Pepsi's products.

A primary sore spot for PepsiCo is Gatorade, whose new marketing campaign for the sports drink hasn't stopped falling sales. Total beverage volume in the Americas for PepsiCo fell 6% in the second quarter.

-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200; anjali.cordeiro@dowjones.com

(Kevin Kingsbury contributed to this article.)