* Deal value includes tax benefit of about $400 mln
* Bai to add $132 mln to 2017 net sales
* PepsiCo to buy probiotics drink maker KeVita
(Adds details, share movement)
Nov 22 Dr Pepper Snapple Group Inc said
on Tuesday it would buy antioxidant beverages maker Bai Brands
LLC for $1.7 billion in cash, the latest example of a
soft-drinks maker investing in products that are perceived to be
Dr Pepper Snapple, which makes flavored tea and juice drinks
under the Snapple brand and also 7UP and Schweppes sodas,
already had a roughly 3 percent stake in Bai and distributed the
company's drinks through its network.
Bai, which means "pure" in Mandarin Chinese, sweetens its
drinks with plant-based ingredients and infuses them with
antioxidants from coffee fruit and white tea.
Bai's drinks - which include carbonated flavored water,
coconut water and premium ready-to-drink teas - have no
artificial sweeteners and only 5 calories and 1 gram of sugar
per serving, the companies said in a joint statement.
Reuters reported in October that Dr Pepper Snapple was in
talks to buy the company.
Dr Pepper Snapple shares were up 1.7 percent in morning
The deal, the company's first major acquisition since being
spun out of Cadbury Schweppes in 2008, comes as consumers
increasingly seek calorie-free alternatives to sugary drinks and
as several U.S. cities voted for a new soda tax.
Soda giants have either built stakes or have bought beverage
companies that make healthier drinks to cater to changing
PepsiCo Inc said on Tuesday it would buy KeVita Inc,
which makes more than two dozen flavors of probiotic drinks that
are organic, gluten-free and vegan.
Coca-Cola Co has bought organic bottled-tea maker
Honest Tea and Zico Coconut Water and invested in organic juice
Princeton, New Jersey-based Bai was founded in 2009 by
entrepreneur Ben Weiss, who owns a majority stake in the company
and will continue to lead Bai within Dr Pepper Snapple's
packaged beverages business.
Dr Pepper Snapple said the purchase price includes a tax
benefit of about $400 million on a net present value basis, and
the deal will be financed through new unsecured notes and
short-term commercial paper.
Dr Pepper Snapple said Bai would add $132 million to its net
sales in 2017, but hurt earnings by 3 cents per share due to
higher marketing costs and interest expenses related to
financing the deal. The deal is expected to add to profits in
Credit Suisse Securities (USA) LLC is Dr Pepper Snapple's
exclusive financial adviser and Morgan, Lewis & Bockius its
J.P. Morgan Securities LLC is Bai's exclusive financial
adviser and Skadden, Arps, Slate, Meagher & Flom LLP gave legal
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by
Savio D'Souza, Sayantani Ghosh and Anil D'Silva)