PepsiCo (NASDAQ:PEP) and Celsius Holdings (NASDAQ:CELH) confirmed a strengthening of their strategic partnership on Friday.
Under the new agreement, Celsius Holdings’ (NASDAQ:CELH) Alani Nu brand will be distributed through PepsiCo’s (NASDAQ:PEP) U.S. and Canadian distribution network to greatly expand the rising brand’s retail presence and reach new demographics. Simultaneously, Celsius Holdings (CELH) has acquired the U.S. and Canadian rights to the Rockstar Energy brand from PepsiCo (PEP), which will add classic energy drink offerings to the company’s portfolio and potentially appeal to a wider consumer base. PepsiCo (PEP) retains ownership of Rockstar Energy internationally and will continue to distribute it domestically for Celsius Holdings (CELH).
As part of the transaction, PepsiCo has invested $585 million in newly issued Celsius Holdings (CELH) convertible preferred stock and increased its stake to approximately 11% on an as-converted basis. PepsiCo (PEP) will also appoint an additional director to the Celsius Holdings (CLEH) board. Going forward, Celsius Holdings (CELH) will take on the key strategic role of “energy lead” for PepsiCo in the U.S., overseeing strategy for Celsius, Alani Nu, and Rockstar Energy, while PepsiCo (PEP) handles distribution.
“Stepping into the role of PepsiCo’s strategic energy drink captain in the U.S. is expected to be a pivotal milestone in our journey to shape the future of modern energy and grow our brands within a leading beverage distribution system,” stated Celsius Holdings (CELH) CEO John Fiedly.
“This agreement marks the next step in PepsiCo reshaping its brand portfolio to position us for long-term growth,” noted Ram Krishnan, CEO PepsiCo Beverages U.S. “Energy is an important growth category, and we believe this move with our partner Celsius creates a stronger multi-brand energy portfolio that is better positioned to serve different consumer cohorts,” he added.
Celsius Holdings (CELH) soared 9.9% in premarket action, while PepsiCo (PEP) traded flat.