The Dr Pepper Snapple Group announced Tuesday that it will buy Bai Brands for $1.7 billion, bringing together the soft drink giant with the producer of fresh fruit flavor and antioxidants.
Dr Pepper Snapple, located in the Dallas suburb of Plano, Texas, said the deal will be financed by new unsecured notes and short-term commercial paper, the Dallas Business Journal reported.
The soda giant already held a minority stake in Bai, paying $15 million for three percent ownership in 2015. Dr Pepper Snapple had added Bai to its allied brands portfolio 17 months ago, the Business Journal noted.
"We're excited to welcome Bai into our family of great brands," Larry Young, the president and CEO of Dr Pepper Snapple, said 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," Young added.
The Wall Street Journal reported that there was "chatter" in the industry that Bai, which was also distributed by Dr Pepper Snapple, would be purchased by a third party. The newspaper said that the soft drink company will used debt to finance the deal, which "is seen cutting slightly into next year's profit as the company plans to boost marketing spending as well as deal with higher interest costs."
Dr Pepper Snapple said in its statement that Bai's founder Ben Weiss will continue to lead that business.
"Over the past seven years, Bai has proven to be an agent of change in a marketplace that is rapidly evolving," Weiss said in the Dr Pepper Snapple statement. "We've worked tirelessly to challenge the notion that better-for-you beverages can't taste good.
"On our journey, we found a strong ally in (Dr Pepper Snapple), an ally who embraced our mission to change the way the world drinks. Now, it only makes sense to continue our quest together."
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