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Beverages

Alkaline Water Co. Acquires Aquahydrate

Bottled-water brands see multiple advantages and synergies
Photograph courtesy of The Alkaline Water Co.

SCOTTSDALE, Ariz. — Bottled-water manufacturers the Alkaline Water Co. Inc. and Aquahydrate Inc. have entered into a definitive agreement to merge in a deal that will see Alkaline acquire all of the issued and outstanding shares of common stock and preferred stock of Aquahydrate in an all-stock transaction.

Alkaline Water, Scottsdale, Ariz., produces premium bottled alkaline drinking water sold under the brand name Alkaline88.

"This is an extremely exciting time for all the Alkaline Water Co. stakeholders as we welcome a new shareholder base that includes significant celebrity investors, partners, brand ambassadors and board members, to create a leading national presence in the premium water category with two powerful brands: Alkaline88 and Aquahydrate," said Alkaline Water Co. Chairman Aaron Keay. "Our CBD-infused health drinks will place us on the map within the rapidly growing market, and through education and our ambassador program will make us a strong competitor for this $22 billion category by 2021.”

Aquahydrate is a private Los Angeles-based performance lifestyle company that manufactures and distributes premium bottled water under the Aquahydrate brand.

"We built Aquahydrate from the ground up by securing deals with the largest retail grocery outlets, creating innovative partnerships and evolving the brand," said Sean "Diddy" Combs, a celebrity board member of Aquahydrate. “Today, I am confident that we are creating a powerhouse by combining Aquahydrate with one of the largest, fastest-growing alkaline water companies in the world. I look forward to this next stage of growth as we build one of the most recognizable brands for premium water."

The transaction is expected to provide significant strategic and financial benefits to Alkaline, Aquahydrate and their shareholders, according to the companies, including:

  • High-profile investors and board members: Aquahydrate's investors and board members include high-profile celebrities Mark Wahlberg, Sean Combs and Jillian Michaels, who have entered into new endorsement agreements with both companies. The combined social media reach of Alkaline, Aquahydrate and the investors is expected to be over 74 million followers across Facebook, Twitter and Instagram.
  • Unique positioning in capital markets: The combined company following the transaction will present a unique opportunity as a premium water company for the investment community. The combination of both brands and all of the respective professionals from both organizations will allow the combined company to attract institutional investor interest and analyst coverage from across North America and ignite the retail investor community.
  • Brand extension and cross-selling: Alkaline has a strong pipeline of brand extensions and new products that it has been developing over the past several months, including flavored waters, CBD products and some alternative packaging options. Management believes that this merger will strengthen those investments by targeting these new products to each brand's unique consumer target market (families for the Alkaline88 brand and active lifestyle/athletes for Aquahydrate). Further, post-acquisition, the combined company is expected to create differentiation across new products within each brand to justify the expanded shelf space, the companies said.
  • Partnership to dominate national rollout to key retail customers: Aquahydrate has already secured key retail supply agreements across North America with retailers such as Walmart, Target, Safeway, Rite Aid, GNC Meijer, QuikTrip and Albertsons. Alkaline88's current retail clients include Walmart, CVS, Albertson/Safeway, Kroger, Schnucks, Smart & Final, Jewel-Osco, Sprouts, Bashas', Stater Bros. Markets, Unified Grocers, Bristol Farms, Vallarta, Superior Foods, Ingles, H-E-B, Brookshire's, Publix, Shaw's, Raley's, Food Lion, Harris Teeter and Festival Foods. Through the consolidation, the combined company will be able to initiate a more aggressive rollout strategy leveraging both distribution platforms.
  • Strong revenues: The combined revenues for the new entity are expected to exceed $65 million for fiscal 2020 on a pro forma basis.
  • Retail buyer synergies: Alkaline plans to consolidate its sales organization and provide retail chain buyers with one point of contact for both brands. Alkaline88 and Aquahydrate will continue to be promoted at the retail level focused on their targeted consumer separately. Being able to present two brands with distinct consumers to retailers gives the combined company a level of category leadership that many other competitors are unable to deliver, the companies said.
  • Production and logistical advantages: There are natural synergies that will allow Aquahydrate to expand its distribution across the country by leveraging the existing Alkaline88 broker network and their current co-packer relationships, resulting in immediate cost savings and economies of scale.

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