Coca-Cola buys remaining stake in BodyArmor for $5.6 billion to rival Gatorade

• The deal will help Coke gain market share in the energy drink segment to rival PepsiCo’s Gatorade, which is the market leader

• Coke bought a 15% stake in Bodyarmor in 2018 and became the second-largest shareholder

Coca-Cola Co on Monday said it bought full control of sports drink maker BodyArmor for $5.6 billion, making it the company’s largest acquisition to date.

In 2018, the beverage giant bought a 15% stake in BodyArmor, becoming the second-largest shareholder.  At the time, NBA legend Kobe Bryant was its third-largest shareholder after investing in the energy-drink brand in 2013, just two years after its founding.

Earlier in February of this year, Coke said that it plans to buy a controlling interest in Bodyarmor later this year in a pre-acquisition filing with the U.S. Federal Trade Commission (FTC).

Deal to overtake Gatorade

The deal indicates that the soda maker aims to gain market share in the sports drink category to take on the market leader, PepsiCo Inc’s Gatorade, which has about 70% market share.

BodyArmor is the second-largest sports-drinks maker by market share and had earlier surpassed Coke’s Powerade by touting itself as a healthier sports drink.

Coca-Cola said BodyArmor is expected to earn more than $1.4 billion, up about 50% this year.

Also Read: Coca-Cola reports continued momentum and strong results in third quarter raises full-year guidance

The beverage giant, in a press release, said, BodyArmor will be managed as a separate business within Coca-Cola’s North America operating unit and will continue to be based in New York but will be distributed by Coke’s bottling system.

As part of the deal, BodyArmor co-founder and Chairman Mike Repole and President Brent Hastie will continue to help the energy drink in the quest to grab a sizeable market share and overtake Gatorade.

Also Read: Pepsico to part ways with Tropicana in a $3.3 billion deal

Portfolio overhaul

The acquisition has also given Coke the ownership of Vitaminwater, Smartwater and Energy Brands, which Repole founded.

Coke has been overhauling its portfolio since the start of the COVID-19 pandemic, discontinuing half its beverage portfolio, around 200 of its beverage brands, including its own energy-drink brand, Powerade, to focus on its sodas.

The BodyArmor deal is Coke’s largest brand acquisition, topping its purchase of Costa Coffee in 2018 for $5.1 billion.

Picture Credit: BevNet