PepsiCo To Increase Celsius Stake With $585 Million Deal: Report

PepsiCo Inc. (PEP) is reportedly set to increase its stake in Celsius Holdings Inc. (CELH) through a $585 million deal, which will result in its holdings rising to 11%.

According to a Bloomberg report citing people familiar with the matter, PepsiCo will purchase Celsius’ preferred convertible stock, while Celsius will acquire the beverage giant’s Rockstar Energy brand in the U.S. and Canada.

PepsiCo’s shares gained 0.25% during Friday’s pre-market trade, while Celsius’ shares were up nearly 8%. Retail sentiment on Stocktwits around PepsiCo was in the ‘neutral’ territory, while users felt ‘bearish’ about Celsius.

PepsiCo will take over the distribution of energy drink Alani Nu in the U.S. and Canada to boost its availability and growth. Celsius had recently acquired the beverage in February for $1.8 billion–the brand was started in 2018 by influencer Katy Hearn, who marketed Alani Nu as a healthy alternative to traditional energy drinks.

PepsiCo invested $550 million in Celsius in 2022, acquiring an 8.5% stake in the company. The new $585 million deal will up PepsiCo’s stake to 11% while allowing it to nominate another director to Celsius’ board, according to the report.

The first acquisition was through a preferred stock deal, similar to the current one, and PepsiCo has extended the conversion period of the previous agreement to match the term under the new investment, the report added. PepsiCo will continue to own the Rockstar Energy brand worldwide, it said.

PEP stock is down over 3% year-to-date, while CELH stock is up 127% during the period.

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