PepsiCo expands presence in the energy category with US$3.85bn acquisition of Rockstar

USA – PepsiCo has secured a deal to acquire Rockstar Energy Beverages, one of the popular energy drink maker, for US$3.85 billion in a move to expand its presence in the fast growing energy drink category.

Founded in 2001, Rockstar produces beverages targeting consumers who lead active lifestyles including athletes and rock stars. 

The company’s products are currently available in over 30 flavors at convenience and grocery outlets in over 30 countries, of which PepsiCo has had a distribution agreement with Rockstar in North America since 2009.

Upon closing of the acquisition, Rockstar will join PepsiCo’s energy portfolio which counts of brands like Mountain Dew’s Kickstart, GameFuel, and AMP. 

PepsiCo Chairman and CEO, Ramon Laguarta, noted that adding Rockstar to its growing portfolio is part of the company’s strategic move to become a more consumer-centric company while capitalizing 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,” Laguarta said.

“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.”

Also commenting on the deal, Russ Weiner, Rockstar’s founder and creator of the world’s first 16oz energy drink 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 has also entered into an agreement, which will provide approximately $0.7 billion of payments related to future tax benefits associated with the transaction, payable over up to 15 years.

The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in the first half of 2020.     

While PepsiCo is yet to close the US$1.7 billion acquisition of South Africa’s Pioner Foods, the company recently entered into a definitive agreement to acquire Hangzhou Haomusi Food, one of the largest online snacks companies in China, for US$705 million.

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