PepsiCo to Buy Rockstar for $3.85 Billion

Acquisition will help accelerate beverage's performance, expand company's energy portfolio, CEO says
Photograph: Shutterstock

PURCHASE, N.Y. — PepsiCo has agreed to buy Rockstar Energy Beverages for $3.85 billion.

PepsiCo’s current energy portfolio includes Mountain Dew’s Kickstart, Game Fuel and AMP. The Purchase, N.Y.-based company has had a distribution agreement with Rockstar in North America since 2009.

"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," PepsiCo Chairman and CEO Ramon Laguarta said. "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, a Las Vegas-based energy drink maker, was founded in 2001. Its products are available in more than 30 flavors at convenience stores and grocery stores.

While the overall energy drink category grew in c-stores in 2019, Rockstar sales declined in c-stores in the past year, according to Chicago-based market research firm IRI. Energy drink unit sales in c-stores grew 6.6.% in the 52 weeks ending Dec. 29, 2019, and Rockstar unit sales declined 5.7% during the same period.

"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. "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 agreed to provide about $700 million of payments related to future tax benefits associated with the transaction, payable over up to 15 years, according to the company. The companies expect the deal to close in the first half of the year.

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