PepsiCo and Celsius Reach Long-Term Distribution Deal

By Connor Hart

PepsiCo Inc. and Celsius Holdings Inc. on Monday announced a definitive agreement of a long-term distribution arrangement.

Celsius, the Boca Raton, Fla.-based maker of fitness energy drinks, will initially transition its U.S. distribution to PepsiCo, and the Purchase, N.Y.-based soda and snack giant will make a growth-supporting investment in Celsius and nominate a director to serve on its board of directors, the companies said.

PepsiCo will make a net cash investment of $550 million to Celsius for stock. Shares underlying the 7.33 million share transaction were priced at $75 each and equate to an estimated 8.5% ownership in the company on an as-converted basis.

The long-term U.S. distribution agreement is effective Monday, and, subject to certain exceptions, includes retail and food service channels. PepsiCo will also become the preferred distribution partner globally for Celsius, the companies said.

Shares of Celsius closed Friday at $88.96 before rising more than 10% in premarket trading Monday to $97.56. The company's share price is up almost 20% so far this year and more than 28% in the past 52 weeks.

"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," said Kirk Tanner, chief executive of PepsiCo Beverages North America.

Write to Connor Hart at [e-mail]

(END) Dow Jones Newswires

08-01-22 0920ET