PepsiCo to acquire Rockstar Energy Beverages for $3.85bn

PepsiCo acquisition of Rockstar Energy Beverages : PepsiCo has signed a $3.85 billion deal to acquire Las Vegas-based energy drink maker Rockstar Energy Beverages in a move to expand its footprint in the fast-growing energy category.

Founded in 2001, Rockstar Energy Beverages produces beverages that target people who lead active lifestyles from athletes to rock stars.  The energy drink maker products are available in more than 30 flavors at convenience and grocery outlets across 30 plus countries.

Since 2009, PepsiCo has a distribution agreement in place with Rockstar Energy Beverages in North America. The acquisition of Rockstar Energy Beverages expands the energy portfolio of PepsiCo, which includes Mountain Dew’s Kickstart, AMP, and GameFuel.

Russ Weiner – Rockstar Energy Beverages founder, commenting on PepsiCo acquisition of Rockstar Energy Beverages, said: “We have had a strong partnership with PepsiCo for the last decade, and I’m happy to take that to the next level and join forces as one company.

“PepsiCo shares our competitive spirit and will invest in growing our brand even further. I’m proud of what we built and how we’ve changed the game in the energy space.”

PepsiCo acquisition of Rockstar Energy Beverages. Photo courtesy of Liggi953/Wikimedia Commons.

PepsiCo said that it has also signed an agreement, which will offer nearly $700 million of payments associated with future tax benefits related to the deal, which will be payable over up to 15 years. The soft drinks and snacking firm said that it does not expect the deal to be material to its revenue or earnings per share in the current year.

Commenting on PepsiCo acquisition of Rockstar Energy Beverages, Ramon Laguarta – PepsiCo Chairman and CEO said: “As we work to be more consumer-centric and capitalize on rising demand in the functional beverage space, this highly strategic acquisition will enable us to leverage PepsiCo’s capabilities to both accelerate Rockstar’s performance and unlock our ability to expand in the category with existing brands such as Mountain Dew.

“Over time, we expect to capture our fair share of this fast-growing, highly profitable category and create meaningful new partnerships in the energy space.”

For PepsiCo, its financial advisor for the deal is Centerview Partners, while Gibson, Dunn & Crutcher is the lead counsel and Davis Polk & Wardwell is the US tax and antitrust counsel. For Rockstar Energy Beverages, its financial advisor for the deal is Goldman Sachs & Co., while its legal counsel is King & Spalding.

The completion of PepsiCo acquisition of Rockstar Energy Beverages, which is subject to regulatory approval and meeting of other customary closing conditions, is likely to be wrapped up in the first half of this year.

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