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PepsiCo Acquires Rockstar Energy For $3.85B

PepsiCo, Inc. (NASDAQ: PEP) announced Wednesday it reached an agreement to acquire energy drink maker Rockstar Energy Beverages for $3.85 billion.

Benzinga · 03/11/2020 12:51

PepsiCo, Inc. (NASDAQ: PEP) announced Wednesday it reached an agreement to acquire energy drink maker Rockstar Energy Beverages for $3.85 billion.

What Happened

PepsiCo's relationship with Rockstar dates back to 2009 when it started distributing energy drinks in North America. Under PepsiCo's complete ownership, the company will be in a better position to take advantage of rising demand in the "functional beverage space," PepsiCo chairman and CEO Ramon Laguarta said in the press release.

PepsiCo will look to accelerate Rockstar's performance and expand its other brands in the category, such as Mountain Dew. Currently, PepsiCo sells energy beverages under the Mountain Dew label, including Kickstart and Game Fuel.

"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," the release said.

Why It's Important

PepsiCo's acquisition marks the first large deal under Laguarta's leadership. Last month, the CEO was asked to comment on the company's energy drink strategy during a conference call. He highlighted success in its ready-to-drink coffee beverages it sells as part of a partnership with Starbucks. He also said the company needs to do a "better job with Rockstar," according to The Wall Street Journal.

Rockstar is also one of the biggest competitors to Monster Beverage Corp (NASDAQ: MNST).

PepsiCo doesn't expect the transaction to be meaningfully positive to its revenue or earnings per share in 2020. The company expects the deal to close in the first half of the year.

PepsiCo's stock traded lower by 3.7% to $129.10 per share art time of publication.

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Photo credit: Mike Mozart, Flickr