PepsiCo To Acquire Rockstar, Expanding Presence In Fast-Growing Energy Category

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Mar 11, 2020, 07:00 ET

PURCHASE, N.Y., March 11, 2020 /PRNewswire/ -- PepsiCo, Inc. (NASDAQ: PEP) ("PepsiCo") today announced that it has entered into an agreement to acquire Rockstar Energy Beverages ("Rockstar"), the popular energy drink maker, for $3.85 billion.

"As we work to be more consumer-centric and capitalize 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," said PepsiCo Chairman and CEO, Ramon Laguarta. "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."

Rockstar, founded in 2001, produces beverages that are designed for those who lead active lifestyles from athletes to rock stars. Rockstar products are available in over 30 flavors at convenience and grocery outlets in over 30 countries. PepsiCo has had a distribution agreement with Rockstar in North America since 2009. In addition to Rockstar, PepsiCo's energy portfolio includes Mountain Dew's Kickstart, GameFuel, and AMP.

"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," said Russ Weiner, Rockstar's founder and creator of the world's first 16oz energy drink. "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. PepsiCo does not expect the transaction to be material to its revenue or earnings per share in 2020. The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in the first half of 2020.

Centerview Partners LLC acted as financial advisor to PepsiCo. Gibson, Dunn & Crutcher LLP acted as lead counsel to PepsiCo, and Davis Polk & Wardwell LLP as U.S. tax and antitrust counsel. Goldman Sachs & Co. LLC acted as financial advisor to Rockstar, with King & Spalding acting as Rockstar's legal counsel.

About PepsiCo
PepsiCo products are enjoyed by consumers more than one billion times a day in more than 200 countries and territories around the world. PepsiCo generated more than $67 billion in net revenue in 2019, driven by a complementary food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. PepsiCo's product portfolio includes a wide range of enjoyable foods and beverages, including 23 brands that generate more than $1 billion each in estimated annual retail sales.

Guiding PepsiCo is our vision to Be the Global Leader in Convenient Foods and Beverages by Winning with Purpose. "Winning with Purpose" reflects our ambition to win sustainably in the marketplace and embed purpose into all aspects of the business. For more information, visit www.pepsico.com.

PepsiCo Cautionary Statement
Statements in this release that are "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. Terminology such as "believe," "expect," "intend," "estimate," "project," "anticipate," "will," or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in any such forward-looking statement. Such risks and uncertainties include, but are not limited to: future demand for PepsiCo's products, as a result of changes in consumer preferences or otherwise; changes in laws related to the use or disposal of plastics or other packaging of PepsiCo's products; changes in, or failure to comply with, applicable laws and regulations; imposition or proposed imposition of new or increased taxes aimed at PepsiCo's products; imposition of labeling or warning requirements on PepsiCo's products; PepsiCo's ability to compete effectively; political conditions, civil unrest or other developments and risks in the markets where PepsiCo's products are made, manufactured, distributed or sold; PepsiCo's ability to grow its business in developing and emerging markets; uncertain or unfavorable economic conditions in the countries in which PepsiCo operates; the ability to protect information systems against, or effectively respond to, a cybersecurity incident or other disruption; damage to PepsiCo's reputation or brand image; water scarcity; business disruptions, including health epidemics or pandemics or other contagious outbreaks, such as the recent coronavirus; failure to successfully complete, integrate or manage acquisitions, such as the proposed acquisition of Rockstar, and joint ventures into PepsiCo's existing operations or to complete or effectively manage divestitures or refranchisings; changes in estimates and underlying assumptions regarding future performance that could result in an impairment charge; loss of, or a significant reduction in sales to, any key customer; disruption to the retail landscape, including rapid growth in the e-commerce channel and hard discounters; climate change or legal, regulatory or market measures to address climate change; other factors that may adversely affect the price of PepsiCo's publicly traded securities and financial performance; and risks related to the proposed acquisition, including the inability to satisfy the conditions to the closing of the proposed acquisition and risks that the proposed acquisition disrupts current plans and operations of Rockstar and the potential difficulties in employee retention as a result of the proposed transaction.

For additional information on these and other factors that could cause PepsiCo's actual results to materially differ from those set forth herein, please see PepsiCo's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.