Coke Buys Full Control of Bodyarmor for $5.6 Billion

Coke Looks to Take on Pepsi in Sports Drink Market

Coca-Cola (KO) is spending $5.6 billion to gain full control of Bodyarmor, a sports drink maker. Three years ago, Coke bought a 15% minority stake in the company, and this week it announced plans to scoop up the other 85%. The takeover, which is the biggest brand acquisition in Coke’s history, comes at a time when the sports drink category is hitting its stride. Coke expects Bodyarmor sales in 2021 to be over $1.4 billion, 50% higher than a year earlier.

With that said, Pepsi (PEP) is still in the lead. The conglomerate controls about 70% of the market thanks to its Gatorade brand. Coke hopes that by acquiring all of Bodyarmor it can chip away at Pepsi’s market share. Bodyarmor, which positions itself as a healthy energy drink option, has surpassed Coke’s Powerade brand to become the second-biggest sports drink maker in the US.

Bodyarmor Executives Will Stay On

Coke’s move to buy the outstanding 85% of Bodyarmor did not catch investors off guard. The beverage company announced plans to acquire the stake in February. At the time, Coke did not disclose when the deal would happen.

Under the terms of the transaction Mike Repole, co-founder of Bodyarmor, will continue to work on the brand’s drink portfolio. The executive will also weigh in on marketing, packaging, and new drink options. Repole founded Vitaminwater, Smartwater, and Energy Brands which are all now owned by Coke. Bodyarmor president Brent Hastie is also staying on board to help propel this category for Coke.

It’s worth noting that the late basketball legend Kobe Bryant invested in Bodyarmor in 2013. When Coca-Cola first invested in the company in 2018 Bryant was the third-largest shareholder. According to figures from the Wall Street Journal, Bryant’s estate will receive roughly $400 million from the sale.

Coke in Overhaul Mode

The Bodyarmor buy surpasses Coke’s 2018 purchase of Costa Coffee for $5.1 billion. The move comes as the beverage giant is in reorganization mode, getting rid of brands that are underperforming. In the spring the company terminated the Coca-Cola Plus Energy drink brand. At the same time Coke is trying to add more beverages to its portfolio to reach additional customers.

The sports drink market is heating up but Coke is still a distant second to Pepsi and its popular Gatorade brand.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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