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PepsiCo Inc. revealed on Monday, Aug. 1, that it had invested $550 million in Celsius Holdings Inc. for a long-term strategic distribution deal. The transaction also awarded the New York-headquartered snack and beverage producer with a stake share in the company.
As per CNBC, the share price of Celsius Holdings immediately rose by eight percent in the morning trading as the news about the deal with Pepsico spreads. With the increase, the market value of the company rose to $6.7 billion.
Celsius Holdings is a leading global fitness energy drink maker, but it is a relatively smaller firm compared to PepsiCo. It said that it agreed to a distribution arrangement with the snack and beverage giant, and this agreement will transition Celsius' present distribution in the U.S. to PepsiCo's top-notch capabilities.
Moreover, as part of the deal, the Frito-Lay manufacturer will also invest in Celsius to help with its growth plans. It will also nominate a director to sit and serve on the fitness energy drink producer’s Board of Directors. On the other hand, Celsius expects to be given more shelf space in its existing retailer partners while also adding more independent store outlets such as gas stations.
“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,” PepsiCo Beverages North America’s chief executive officer, Kirk Tanner, said in a press release.
The chief added, “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.”
John Fieldly, the president, chairman, and CEO of Celsius, also commented on its agreement with PepsiCo, “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.”
Meanwhile, PepsiCo’s $550 million investment in Celsius is equivalent to just a minority stake ownership of about 8.5%. It will start helping the latter with its distribution this week.
