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Keurig Dr Pepper to Acquire CORE Nutrition in Deal Valued at USD 525m.

M2 EQUITYBITES-September 28, 2018-Keurig Dr Pepper to Acquire CORE Nutrition in Deal Valued at USD 525m

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28 September 2018 - Massachusetts, US-based beverage company Keurig Dr Pepper (NYSE: KDP) has agreed to acquire Texas, US-based beverage company CORE Nutrition LLC at a value of USD 525m, or approximately USD 435m net of anticipated tax benefits, the company said.

This transaction is subject to customary closing conditions and is expected to close by the end of 2018.

The acquisition of CORE Nutrition will be funded with KDP common stock, net of KDP's current equity investment and certain other contractual adjustments. The company expects the transaction to be neutral to KDP's adjusted diluted earnings per share in 2019 and accretive thereafter.

The acquisition represents the company's latest move in the evolution of its allied brands portfolio.

CORE has been a KDP allied brand since 2016, with KDP currently managing approximately two-thirds of the brand's US distribution.

Net sales of all CORE beverages have grown at an average annualised rate of approximately 115% over the past three years, with current retail sales across both measured and unmeasured channels estimated in excess of USD 200m in the latest 52 weeks.

Following the closing of the acquisition, 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 certain select existing CORE Nutrition distribution partners are expected to maintain their channel coverage.

The Core Nutrition portfolio includes CORE Hydration, a premium, nutrient-enhanced bottled water, and CORE Organic, A-certified organic enhanced fruit hydration, both currently distributed by KDP.

Evercore acted as financial advisor to KDP and Skadden, Arps, Slate, Meagher and Flom LLP served as legal counsel. Gibson, Dunn and Crutcher LLP served as legal counsel for CORE Nutrition and Whipstitch Capital provided a fairness opinion.

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Publication:M2 EquityBites (EQB)
Date:Sep 28, 2018
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