PepsiCo Inc. has signed a long-term strategic distribution agreement with Celsius Holdings Inc., maker of the Celsius fitness energy drink.
The distribution agreement initially transitions Celsius’ current U.S. distribution to PepsiCo’s operations, including retail and food service channels. PepsiCo will also become the preferred distribution partner globally for Celsius.
Also, the Purchase-based PepsiCo will make a $550 million investment in Celsius in exchange for convertible preferred stock. PepsiCo will also nominate a director to serve on Celsius’ board of directors.
As part of the transaction, PepsiCo will provide a net cash investment of $550 million to Celsius in exchange for convertible preferred stock. Shares underlying the transaction were priced at $75 per share, or approximately 7.33 million shares, which equates to an estimated 8.5% ownership in Celsius on an as-converted basis. The preferred shares are entitled to a 5% annual dividend.
“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 at PepsiCo Beverages North America. “The Celsius brand’s growing momentum coupled with the strength of PepsiCo’s portfolio and go-to-market capabilities create a combination we believe will be very compelling and valuable to retailers and consumers. We are looking forward to seeing the impact these two outstanding organizations can make together to more fully capture energy occasions.”
