Dr Pepper Snapple Buys Bai

$1.7 billion purchase expected to net $132 million in 2017 sales

PLANO, Texas -- After taking Bai on as one of its allied brands in 2013, Dr Pepper Snapple Group Inc. has reached an agreement to acquire Bai Brands LLC and its complete portfolio of antioxidant-infused beverages.

“Bai has contributed greatly to our allied-brand lineup since we began distributing it broadly in 2013. Adding it to the broad range of choices and options in our company-owned portfolio is a natural next step,” said Dr Pepper Snapple (DPS) President and CEO Larry Young. “Moving forward, we will empower Bai's management team to continue the breakthrough and disruptive branding and innovation that have revolutionized their categories and work with them to put the brand in front of more consumers in more places."

Bai provides a strong platform to incubate and grow better-for-you beverages throughout the noncarbonated and carbonated beverage sectors. It is expected to generate approximately $425 million in net sales in 2017 and add an incremental $132 million to DPS’ current net sales expectation for 2017, the beverage company said.

"In a relatively short time, Bai has carved out a leadership position in the enhanced-water category and has now extended that success into other fast-growing and profitable categories,” Young said. “We're equally impressed with their innovation pipeline, which will continue to meet the needs of consumers seeking great tasting, low-calorie beverages with natural flavors and no artificial sweeteners. … The acquisition of Bai will further enable us to meet growing consumer demand for better-for-you beverages.”

Bai, Princeton, N.J., will operate within the Packaged Beverages segment of DPS, Plano, Texas, and continue to be led by founder Ben Weiss.

"Over the past seven years, Bai has proven to be an agent of change in a marketplace that is rapidly evolving," said Weiss. "We've worked tirelessly to challenge the notion that better-for-you beverages can't taste good. On our journey, we found a strong ally in DPS, an ally who embraced our mission to change the way the world drinks. Now, it only makes sense to continue our quest together. We are thrilled to join the DPS family and create a new path forward with infinite possibilities."

The cash purchase price of $1.7 billion includes a tax benefit of approximately $400 million on a net-present value basis and will be financed through new unsecured notes and short-term commercial paper. The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2017. The boards of both companies have approved the transaction.

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