US soft drink company, Dr Pepper Snapple Group Inc yesterday struck a deal to acquire antioxidant beverages maker Bai Brands LLC for $1.7 billion, in cash.
The cash purchase price of $1.7 billion includes a tax benefit of approximately $400 million on a net present value basis.
Dr Pepper Snapple, the maker of 7UP and Schweppes soft drinks, intends to fund the deal through new unsecured notes and short term commercial paper.
Post closing, Bai will operate within the Packaged Beverages segment of Dr Pepper Snapple and continue to be led by founder Ben Weiss.
Dr Pepper Snapple, which already holds around 3 per cent stake in Bai, said that Bai is expected to generate approximately $425 million in net sales in 2017 and add an incremental $132 million to its current net sales expectation for 2017.
Founded in 2009 by entrepreneur and coffee industry pioneer Ben Weiss who was inspired by the coffee fruit, an anti-oxidant rich plant which is typically a farming fertilizer after the coffee bean is harvested.
Bai has grown steadily and expended in the US after it teamed up with Dr Pepper Snapple to distribute its products that are now sold at Target, Safeway and others.
Bai has raised $45 million in funding through angel investors and Dr Pepper Snapple acquired the minority stake in the company in 2015 at a $500 million valuation.
Plano, Texas-based Dr Pepper Snapple, spun off from Cadbury Plc in 2008, is one of North America's leading refreshment beverage companies.
It markets more than 50 brands of carbonated soft drinks, juices, teas, mixers, waters and other premium beverages.
In addition to its flagship Dr Pepper and Snapple brands, its portfolio includes 7UP, A&W, Canada Dry, Clamato, Crush, Hawaiian Punch, Mott's, Mr & Mrs T mixers, Penafiel, Rose's, Schweppes, Squirt and Sunkist soda.
"We're excited to welcome Bai into our family of great brands," said Larry Young, Dr Pepper Snapple president and CEO. "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. 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."
"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," he added.