PepsiCo to acquire prebiotic soda brand poppi for $1.95 billion

PURCHASE, N.Y. - PepsiCo, Inc. (NASDAQ: PEP), currently valued at $203.79 billion, has announced a definitive agreement to purchase poppi, a burgeoning prebiotic soda company, for $1.95 billion, a move that includes $300 million in expected cash tax benefits, effectively lowering the net cost to $1.65 billion. The terms also feature additional earnout potential based on poppi achieving certain performance targets post-acquisition. According to InvestingPro, PepsiCo maintains impressive gross profit margins of 54.89%, demonstrating strong operational efficiency in its existing business.

poppi, known for its prebiotic sodas made with fruit juice and apple cider vinegar, has gained traction for offering a low-calorie, low-sugar beverage option. The brand aligns with PepsiCo’s strategic shift towards healthier products in response to consumer demand for wellness-oriented choices.

Ramon Laguarta, Chairman and CEO of PepsiCo, emphasized the company’s ongoing efforts to innovate and strategically acquire brands that offer more positive choices to consumers, noting poppi’s fit within PepsiCo’s portfolio transformation.

poppi was founded by Allison and Stephen Ellsworth and gained prominence after an appearance on Shark Tank, where it secured investment from Rohan Oza and funding from CAVU Consumer Partners. Allison Ellsworth expressed excitement about the acquisition, believing poppi will continue to thrive under PepsiCo’s stewardship.

The transaction is subject to standard closing conditions and regulatory approvals, with financial advisement to PepsiCo from Centerview Partners LLC, J.P. Morgan Securities LLC, and legal counsel from Cravath, Swaine & Moore LLP, as well as tax counsel from Davis Polk & Wardwell LLP. poppi was advised by Goldman Sachs & Co. LLC and Cooley LLP.

PepsiCo, a global food and beverage leader with a diverse portfolio including Lay’s, Doritos, Gatorade, and SodaStream, generated nearly $92 billion in net revenue in 2024. Currently trading near its 52-week low, the company maintains a strong financial position with an overall "GOOD" health rating from InvestingPro. This acquisition is part of PepsiCo’s vision to be a global leader in beverages and convenient foods, guided by its pep+ (PepsiCo Positive) strategy, which prioritizes sustainability and human capital. For investors seeking deeper insights, InvestingPro offers comprehensive analysis through its Pro Research Report, available for PepsiCo and 1,400+ other top US stocks.

The addition of poppi underscores PepsiCo’s commitment to expanding its healthier offerings and adapting to evolving consumer preferences. This information is based on a press release statement.

In other recent news, PepsiCo is reportedly nearing a significant acquisition deal with Poppi, a healthier soda brand, valued at over $1.5 billion. This potential acquisition aligns with PepsiCo’s recent focus on expanding its portfolio with healthier brands, following its plans to acquire Siete Foods for $1.2 billion and the remaining 50% of Sabra Dipping Co. Meanwhile, major food corporations, including PepsiCo, are advocating for tariff exemptions on certain imports such as cocoa and fruit. This move aims to protect U.S. manufacturers and reduce consumer inflation by targeting ingredients not available domestically.

In strategic shifts, PepsiCo announced changes to its internal structure by replacing its Diversity, Equity, and Inclusion (DEI) initiatives with an "Inclusion for Growth" strategy. This new approach emphasizes a culture of inclusion driven by excellence and contribution. On the analyst front, Piper Sandler has maintained an Overweight rating on PepsiCo with a $167 price target, noting promising trends in its Frito-Lay North America division. Goldman Sachs also reiterated a Buy rating with a $175 target, highlighting PepsiCo’s transformation into a more agile business and its attractive valuation compared to the Staples sector. These developments reflect PepsiCo’s ongoing strategic efforts and market positioning.

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