PepsiCo Acquires an 8.5% Stake in Energy Drink Maker Celsius for $550 Million

PepsiCo (NASDAQ: PEP) announced today it reached an agreement with fitness energy drink maker Celsius (NASDAQ: CELH) which will see the former make an investment in the latter to support growth plans.

Celsius will transition its current U.S. distribution to PepsiCo as a part of the agreement while PEP will also become the preferred distribution partner globally for Celsius.

Moreover, PepsiCo will make a $550 million cash investment to Celsius in exchange for an 8.5% ownership stake. This means PEP acquired about 7.3 million CELH shares at a discount of $75 per share.

"We are extremely pleased to partner with Celsius and excited about the opportunity for our two organizations to drive growth and innovation in the energy beverage category," said Kirk Tanner, CEO, PepsiCo Beverages North America.

CELH shares closed at $88.96 yesterday and are up almost 9% in premarket Monday on the PEP partnership.

“We believe the opportunity to partner with a global best-in-class distributor provides Celsius with significant near-term additional shelf space in both existing retailers as well as new expansion within the independent retailers that represent a significant portion of the U.S. convenience and gas channel where approximately 70% of energy drinks are sold,” Celsius President, Chairman and CEO, John Fieldly, added.

By Senad Karaahmetovic

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