PLANO, Texas --Keurig Dr Pepper (KDP) has entered into a definitive agreement to acquire Core Nutrition LLC for $525 million.
Founded in 2015, the Core Nutrition portfolio includes Core Hydration, a premium, nutrient-enhanced bottled water, and Core Organic, an organic fruit-infused beverage. Both products are currently distributed by Plano, Texas-based KDP.
“Core has been a valued and successful allied brand partner, and we are pleased that this on-trend beverage will become part of our owned KDP family of brands,” KDP CEO Bob Gamgort said. “Through this transaction, we intend to realize the full growth potential for the business."
Core has been a KDP allied brand since 2016, with KDP managing about two-thirds of the brand's U.S. distribution. Net sales of all Core beverages have grown at an average annualized rate of about 115% over the past three years, with current retail sales across both measured and unmeasured channels estimated at more than $200 million in the latest 52 weeks, according to IRI data.
“We created Core to meet the increasing desires for innovative, enhanced water offerings with functional benefits for today’s modern consumer. KDP has been an outstanding partner for Core, and I am certain that, under its ownership, Core will continue to see tremendous long-term success,” said Lance Collins, founder of Beverly Hills, Calif.-based Core Nutrition. Collins will remain a shareholder in the company.
The company will fund the acquisition with KDP common stock, net of KDP's current equity investment and certain other contractual adjustments, it said. KDP said it expects the transaction to be neutral to its adjusted diluted earnings per share in 2019 and accretive thereafter.
The transaction is subject to customary closing conditions, and the companies expect it to close by the end of 2018. Following the closing, both Core Hydration and Core Organic will continue to be distributed primarily through KDP's company-owned direct-store-delivery network and independent distributor network, while KDP expects certain existing Core Nutrition distribution partners to maintain their channel coverage.
KDP has a range of hot and cold beverage brands, including Keurig, Dr Pepper, Green Mountain Coffee Roasters, Canada Dry, Snapple, Bai, Mott's and The Original Donut Shop.
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