PepsiCo Expands Energy Drink Portfolio With Rockstar Acquisition

PURCHASE, N.Y. — PepsiCo Inc. will purchase Rockstar Energy Beverages for $3.85 billion, giving it a larger stake in the energy drink market.

The 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," said PepsiCo Chairman and CEO Ramon Laguarta.

"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," he added.

Rockstar products are available in 30-plus flavors at convenience and grocery stores in more than 30 countries. In addition to Rockstar, PepsiCo's energy drink portfolio includes Mountain Dew's Kickstart, Gamefuel and AMP.

"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 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 also entered into an agreement to provide approximately $0.7 billion of payments related to future tax benefits associated with the transaction, payable over up to 15 years. It does not expect the transaction to be material to its revenue or earnings per share in 2020, the company said.

The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in the first half of 2020.