Keurig Dr Pepper (KDP), Burlington, Mass., and Plano, Texas, have entered into a definitive agreement to acquire CORE Nutrition LLC at a value of $525 million, or approximately $435 million net of anticipated tax benefits. Founded in 2015, the Core Nutrition portfolio includes CORE Hydration, a premium, nutrient-enhanced bottled water, and CORE Organic, USDA-certified organic enhanced fruit hydration, both currently distributed by KDP.
The acquisition of CORE Nutrition will be funded with KDP common stock, net of KDP’s current equity investment and certain other contractual adjustments. The company expects the transaction to be neutral to KDP’s adjusted diluted earnings per share in 2019 and accretive thereafter.
CORE has been a KDP allied brand since 2016, with KDP currently managing approximately two-thirds of the brand’s U.S. distribution. Net sales of all CORE beverages have grown at an average annualized rate of approximately 115 percent during the past three years, with current retail sales across both measured and unmeasured channels estimated in excess of $200 million in the latest 52 weeks, citing sales data from Information Resources Inc. (IRI) measured channels and company estimates for unmeasured channels.
Commenting on the announcement, KDP Chief Executive Officer Bob Gamgort stated: “CORE has been a valued and successful allied brand partner, and we are pleased that this on-trend beverage will become part of our owned KDP family of brands. Our sales and distribution capabilities have helped fuel significant growth for the CORE portfolio. Through this transaction, we intend to realize the full growth potential for the business.”
Lance Collins, founder of CORE, added: “We created CORE to meet the increasing desires for innovative, enhanced water offerings with functional benefits for today’s modern consumer. KDP has been an outstanding partner for CORE and I am certain that, under its ownership, CORE will continue to see tremendous long-term success.”
Following the closing of the acquisition, both CORE Hydration and CORE Organic will continue to be distributed primarily through KDP’s company-owned direct-store-delivery network and independent distributor network, while certain select existing CORE Nutrition distribution partners are expected to maintain their channel coverage. BI
