Coca-Cola Acquisition of BodyArmor
● Announcement date: 1 November 2021
● Industry: Beverages Industry
● Deal Value: $5.6 Billion
● Deal consideration: cash-on-hand with M&A and capital allocation framework
● Acquirer advisors: N/A
● Target advisors: N/A
First Company: Coca Cola
● Founded: 29 January 1892
● HQ: Atlanta, Georgia, U.S
● Market Cap: 241.50 Billion
● EV: 268.34 Billion
● LTM EBITDA: 13.31 Billion
● EV/LTM EBITDA: 17.76
Coca- Cola is a beverage retailer, manufacturer and marketer for non-alcoholic beverages concentrate and syrups. The company is listed in NYSE: KO and sold in more than 200 countries. They hold a myriad of brands including: Sprite, Fanta, Dasani, Costa, Minute Maid and more brands ranging from sparkling soft drinks to sports drinks.
The company operates in Europe, the Middle East and Africa, North America, Asia Pacific and Latin America.
They employ more than 70,000 worldwide.
Second Company: Body Armor
● Founded: 2011 ● HQ: Queens, New York, US.
● Market Cap: N/A
● EV: countries EBITDA N/A
● EV/LTM EBITDA: N/A
BodyArmor produced and sold sports drinks and was founded in 2011 by Mike Repole and Lance Collins. Kobe Bryant purchased a significant stake in the company and became a shareholder in 2013. The company say that their “Super Drink” provides superior nutrition, hydration and taste. They say that they produce twice the amount of electrolytes as the leading sports drink, which is why they have recently seen a jump in sales. BodyArmor is made in the USA with all-natural, gluten-free, no preservatives and no artificial colours or flavours.
Strategic Rationale
Coca- Cola have bought 85% of BodyArmor with the value of a $5.6 billion deal. In 2018 Coca-Cola purchased the first 15% of BodyArmor. Forecasts show that by 2025 BodyArmor’s value will reach $13.6 billion.
Coca-Cola addressed this acquisition to accelerate growth and expand capacity. Coca-Cola already owns Powerade, but their brand is far behind BodyArmor, the second-largest player in the sports drink.
PepsiCo’s Gatorade is the most significant player in the sports drink industry, with roughly 70% market share which gives Coca-Cola a clear platform to increase their share. Mike Repole, BodyArmor founder with Brent Hastie, President BodyArmor will stay on to help Coca-Cola challenge the giant Gatorade.
Risks
Due to the pandemic, Coca-Cola are having a tough year. Since the acquisition announced, Coca-Cola stock seem to drop to 1%. In the long term analysts predict that the market risk will be temporary and the takeover will give a positive impact toward both companies.
The deal go was completed on 1 November 2021.
Marsya Khairuna
https://edition.cnn.com/2021/11/01/business/coca-cola-bodyarmor/index.html
