FRISCO, Texas — This article was originally published by our content partners at the Dallas Business Journal. You can read the original article here.
Keurig Dr Pepper Inc. will grow its presence in energy drink manufacturing with a more than $1 billion acquisition.
The beverage manufacturer, which is co-headquartered in Frisco and Burlington, Massachusetts, agreed Oct. 24 to purchase Ghost, a lifestyle sports nutrition business based in Chicago, and its affiliates, which includes the ready-to-drink energy brand Ghost Energy.
The deal calls for Keurig Dr Pepper (Nasdaq: KDP) to first make an initial cash investment of $990 million for a 60% stake in Ghost and buy the remaining 40% by 2028.
The first part of that deal is expected to close in late 2024 or early 2025, according to an Oct. 24 announcement.
"GHOST is a differentiated brand with significant growth potential, and we are excited to partner with its founders to take the business to the next level,” Keurig CEO Tim Cofer said in a statement. "This acquisition strengthens our position in the attractive energy drink category, accelerating our portfolio evolution toward consumer-preferred, growth-accretive spaces through a disciplined deal structure."
In the second stage of the deal, Keurig Dr Pepper's purchase of the remaining 40% stake will be done at a pre-negotiated valuation reflecting Ghost’s 2027 financial performance.
Prior to completion of the dewal, KDP expects to invest up to $250 million in mid-2025 to transition Ghost Energy's existing distribution agreements.
Founded in 2016, Ghost has more than quadrupled its sales over the past three years.
Ghost co-founder Dan Lourenco said when thinking about the company’s next chapter, Keurig’s expertise and track record of growing brands made it the “right home” for Ghost and its team.
Lourenco and co-founder Ryan Hughes will continue to lead the company as part of Keurig’s U.S. Refreshment Beverages sector.
KDP generated roughly $14 billion in revenue last year and had nearly 28,000 employees. It operates 30 manufacturing sites and has more than 160 principal warehouses/distribution centers, according to its website. Its portfolio of more than 125 brands includes Dr Pepper, 7Up and Canada Dry.
The company moved the Texas part of its co-headquarters from Plano to The Star in Frisco in 2019. KDP in May filed paperwork with the state indicating it's establishing a 389,000-square-foot distribution hub in the Trinity West Business Park in West Dallas. The shipment facility at Singleton Boulevard and Norwich Street will also have office space, according to a filing with the Texas Department of Licensing and Regulation.
Bank of America Securities served is financial adviser to Keurig Dr Pepper for the purchase of Ghost. Cleary Gottlieb Steen & Hamilton LLP acted as legal adviser. Morgan Stanley & Co. LLC served as financial adviser to Ghost, with Winston & Strawn LLP acting as legal adviser.
