The Clap
PepsiCo announced a long-term deal with energy drink maker Celsius Holdings.
The Deets
According to CNBC, the deal sees PepsiCo invest $550 million in Celsius as part of a long-term distribution deal.
Pepsi’s investment in Celsius gives them a minority stake of roughly 8.5% in the company.
Why this Matters
Pepsi is looking to set foot in the fast-growing energy drink industry.
The industry is one of the fastest growing beverage segments outside of alcohol, and Pepsi has been increasing its efforts in energy drinks in recent years as soda consumption falls.
Shares of Celsius went up 11% following the news, bringing its market value to $7.45 billion.
Some Background
Pepsi previously signed an exclusive distribution agreement with Vital Pharmaceuticals’ Bang Energy. This partnership did not age well, however, resulting in a legal battle that ended in Pepsi’s favor.
In June, the two companies terminated the deal earlier than expected. This pushed PepsiCo to look for another energy drink maker to invest in.