Asia FX muted, dollar weakens slightly ahead of Fed rate decision
On Friday, JPMorgan analyst Andrea Teixeira maintained an Overweight rating and a $31.00 price target on Celsius Holdings (NASDAQ:CELH), which according to InvestingPro analysis appears fairly valued at current levels. The company announced a definitive agreement to acquire Alani Nutrition, also known as Alani Nu, for a net purchase price of $1.65 billion. With a current market capitalization of $6 billion and strong financial health metrics, Celsius is well-positioned for this strategic move. The transaction includes $150 million in tax assets, which reduces the gross price from $1.8 billion to the net amount.
Alani Nu reported revenue of $595 million and EBITDA of $87 million for 2024. Celsius Holdings anticipates the acquisition will yield $50 million in run-rate cost synergies within two years after the deal closes. The company also expects the acquisition to be accretive to cash EPS in the first full year post-acquisition. The purchase multiple is less than 3x Alani Nu’s revenue and roughly 12x the fully synergized EBITDA of $137 million.
To finance the acquisition, Celsius plans to utilize a combination of $1.275 billion in cash, $500 million in stock, and a potential $25 million earn-out based on Alani Nu’s 2025 performance. The stock portion equates to approximately 22.5 million shares, translating to an 8.7% pro-forma ownership stake. A lock-up agreement is in place, which will be lifted over two years at intervals of 33%, 33%, and 34% on the 12-, 18-, and 24-month anniversaries post-closing. The cash component will be funded through $900 million in debt and $375 million in cash on hand. InvestingPro data shows Celsius maintains a healthy current ratio of 3.62 and holds more cash than debt on its balance sheet, suggesting strong financial flexibility for this acquisition. Investors seeking deeper insights into Celsius’s financial position can access comprehensive metrics and 16 additional ProTips through InvestingPro’s detailed research reports.
The acquisition is bolstered by Alani Nu’s strong retail performance, with sales in the total U.S. MULO Plus with Convenience sector growing by 78% year over year, as reported by Circana for the four-week period ending January 26, 2025. Alani Nu’s dollar share for the same period was 4.8%, marking an increase of approximately 200 basis points from the previous year.
The deal is slated for completion in the second quarter of 2025. Post-acquisition, Alani Nu will operate within Celsius, and key members of the Congo Brands leadership team have agreed to continue as advisors to Celsius. Analyst consensus remains optimistic, with price targets ranging from $26 to $62, reflecting potential upside from current levels. For detailed valuation analysis and expert insights on Celsius Holdings and 1,400+ other stocks, investors can access comprehensive Pro Research Reports available on InvestingPro.
In other recent news, Celsius Holdings has announced its fourth-quarter 2024 earnings, reporting sales and adjusted EBITDA that exceeded consensus estimates. The company also disclosed its strategic acquisition of Alani Nutrition LLC for a net purchase price of $1.65 billion, a move expected to close in the second quarter of 2025. This acquisition is anticipated to enhance Celsius’s brand positioning and could potentially increase sales and adjusted EBITDA by approximately 50% in 2026, according to Stifel analysts. Despite this positive outlook, Stifel has revised its price target for Celsius to $37, maintaining a Buy rating, while Jefferies also adjusted its price target to $33, citing distribution challenges.
Celsius’s acquisition of Alani Nu, a brand known for its female-focused functional beverages, is set to create a leading platform in the energy drink market. The transaction involves a mix of cash and stock, with $1,275 million in cash and $500 million in newly issued restricted shares. Additionally, Celsius reported fourth-quarter earnings per share of $0.14, surpassing analyst expectations, although revenue was slightly below the consensus estimate at $332.2 million. UBS Investment Bank and Freshfields US LLP are advising Celsius on this transaction, which is subject to standard closing conditions. Meanwhile, Jefferies noted a deceleration in Celsius’s growth and distribution challenges, prompting a downward revision of their growth estimates for the company.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.