Keurig Dr Pepper to acquire CORE Nutrition LLC for US$525m

USA – Keurig Dr Pepper, an American beverage-maker conglomerate, has announced that it has entered into a definitive agreement to acquire CORE Nutrition LLC at a value of US$525 million, or approximately US$435 million net of anticipated tax benefits.

Founded in 2015, the rapidly growing Core Nutrition portfolio includes CORE Hydration, a premium, nutrient-enhanced bottled water, and CORE Organic, USDA-certified organic enhanced fruit hydration, both currently distributed by KDP.

According to the company, the acquisition of CORE Nutrition will be funded with KDP common stock, net of KDP’s current equity investment and certain other contractual adjustments.

The Company expects the transaction to be neutral to KDP’s adjusted diluted earnings per share in 2019 and accretive thereafter.

CORE has been a KDP allied brand since 2016, with KDP currently managing approximately two-thirds of the brand’s U.S. distribution.

Net sales of all CORE beverages have grown at an average annualized rate of approximately 115% over the past three years, with current retail sales across both measured and unmeasured channels estimated in excess of US$200 million in the latest 52 weeks.

“CORE has been a valued and successful allied brand partner, and we are pleased that this on-trend beverage will become part of our owned KDP family of brands.

Our sales and distribution capabilities have helped fuel significant growth for the CORE portfolio.

Through this transaction we intend to realize the full growth potential for the business,” said KDP CEO Bob Gamgort.

“We created CORE to meet the increasing desires for innovative, enhanced water offerings with functional benefits for today’s modern consumer.

KDP has been an outstanding partner for CORE and I am certain that, under its ownership, CORE will continue to see tremendous long-term success.

I am a strong supporter of the KDP strategy and business model and am looking forward to being a shareholder in the company,” said Lance Collins, founder of CORE.

Following the closing of the acquisition, both CORE Hydration and CORE Organic will continue to be distributed primarily through KDP’s company-owned direct store delivery network and independent distributor network, while certain select existing CORE Nutrition distribution partners are expected to maintain their channel coverage.

The transaction is subject to customary closing conditions and is expected to close by the end of 2018.  Evercore acted as financial advisor to KDP and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel.

Gibson, Dunn & Crutcher LLP served as legal counsel for CORE Nutrition and Whipstitch Capital provided a fairness opinion.

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