Win-win? Celsius becomes PepsiCo's energy drink captain in the U.S. as part of an expansive deal

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PepsiCo (NASDAQ:PEP [https://seekingalpha.com/symbol/PEP]) and Celsius Holdings (NASDAQ:CELH [https://seekingalpha.com/symbol/CELH]) confirmed a strengthening of their strategic partnership on Friday.

Under the new agreement, Celsius Holdings' (NASDAQ:CELH [https://seekingalpha.com/symbol/CELH]) Alani Nu brand will be distributed through PepsiCo's (NASDAQ:PEP [https://seekingalpha.com/symbol/PEP]) U.S. and Canadian distribution network to greatly expand the rising brand's retail presence and reach new demographics. Simultaneously, Celsius Holdings (CELH [https://seekingalpha.com/symbol/CELH]) has acquired the U.S. and Canadian rights to the Rockstar Energy brand from PepsiCo (PEP [https://seekingalpha.com/symbol/PEP]), which will add classic energy drink offerings to the company's portfolio and potentially appeal to a wider consumer base. PepsiCo (PEP [https://seekingalpha.com/symbol/PEP]) retains ownership of Rockstar Energy internationally and will continue to distribute it domestically for Celsius Holdings (CELH [https://seekingalpha.com/symbol/CELH]).

As part of the transaction, PepsiCo has invested $585 million in newly issued Celsius Holdings (CELH [https://seekingalpha.com/symbol/CELH]) convertible preferred stock and increased its stake to approximately 11% on an as-converted basis. PepsiCo (PEP [https://seekingalpha.com/symbol/PEP]) will also appoint an additional director to the Celsius Holdings (CLEH) board. Going forward, Celsius Holdings (CELH [https://seekingalpha.com/symbol/CELH]) will take on the key strategic role of "energy lead" for PepsiCo in the U.S., overseeing strategy for Celsius, Alani Nu, and Rockstar Energy, while PepsiCo (PEP [https://seekingalpha.com/symbol/PEP]) handles distribution.

"Stepping into the role of PepsiCo’s strategic energy drink captain in the U.S. is expected to be a pivotal milestone in our journey to shape the future of modern energy and grow our brands within a leading beverage distribution system," stated Celsius Holdings (CELH [https://seekingalpha.com/symbol/CELH]) CEO John Fiedly.

"This agreement marks the next step in PepsiCo reshaping its brand portfolio to position us for long-term growth," noted Ram Krishnan, CEO PepsiCo Beverages U.S. "Energy is an important growth category, and we believe this move with our partner Celsius creates a stronger multi-brand energy portfolio that is better positioned to serve different consumer cohorts," he added.

Celsius Holdings (CELH [https://seekingalpha.com/symbol/CELH]) soared 9.9% in premarket action, while PepsiCo (PEP [https://seekingalpha.com/symbol/PEP]) traded flat.

MORE ON CELSIUS

* Celsius Holdings: Were The Results As Good As The Share Price Shows? [https://seekingalpha.com/article/4812517-celsius-holdings-were-the-results-as-good-as-the-share-price-shows]
* Celsius Has Doubled Since My Buy Rating - Here's Why I'm Downgrading To Hold [https://seekingalpha.com/article/4812120-celsius-has-doubled-since-my-buy-rating-heres-why-im-downgrading-to-hold]
* Celsius: Alani Home Run [https://seekingalpha.com/article/4810583-celsius-alani-home-run]
* Celsius signals low 50s gross margin outlook for H2 2025 as Alani Nu drives 84% revenue surge [https://seekingalpha.com/news/4481463-celsius-signals-low-50s-gross-margin-outlook-for-h2-2025-as-alani-nu-drives-84-percent]
* Celsius' sweet success without the sugar: Explosive Q2 fuels rally [https://seekingalpha.com/news/4481245-celsius-sweet-success-without-the-sugar-explosive-q2-fuels-rally]