Dr Pepper Snapple Group Inc. (DPS), Plano, Texas, has reached an agreement to acquire Bai Brands LLC, Princeton, N.J., and its complete portfolio of high-growth premium antioxidant-infused beverages. The cash purchase price of $1.7 billion includes a tax benefit of approximately $400 million on a net present-value basis and will be financed through new unsecured notes and short-term commercial paper, the company says.
DPS stated that it expects to maintain its strong investment-grade credit profile and has no plans to change its existing shareholder dividends and share repurchase distributions.
Bai provides a strong platform to incubate and grow better-for-you beverages throughout the non-carbonated and carbonated beverage sectors, DPS adds. Bai is expected to generate approximately $425 million in net sales in 2017 and to add an incremental $132 million to DPS’ current net sales expectation for 2017. The transaction is expected to be approximately $0.03 dilutive to reported diluted EPS in 2017 driven by planned increases in marketing investments behind the brand and increased interest expense associated with the financing of the purchase price. The transaction is expected to be accretive to reported diluted EPS in 2018, DPS states.
“We’re excited to welcome Bai into our family of great brands,” said Larry Young, DPS president and chief executive officer, in a statement. “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.