Keurig Dr Pepper Inc. (KDP) and Nutrabolt announce a strategic partnership, including a definitive agreement for a long-term sales and distribution arrangement that leverages KDP's go-to-market capabilities and a significant equity investment that enables KDP to participate in the value creation upside expected to be created through the strategic partnership. The equity investment is expected to close by year-end.
Nutrabolt is a fast-growing, global active health and wellness company with a portfolio of brands, including C4 Energy, C4 Pre-Workout, and XTEND.
Under the long-term sales and distribution agreement, KDP will sell and distribute C4 Energy in the vast majority of KDP's company-owned direct store distribution territories, which is expected to increase retail availability and household penetration for the brand. Nutrabolt will continue to distribute C4 Energy directly or through its existing distribution network to the specialty, health club, and fitness channels and will continue to work with some of its existing beverage distributors in certain markets.
KDP will make a cash investment in Nutrabolt of $863M, or approximately $740M net of anticipated cash tax benefits, in exchange for preferred equity with a 5% annual coupon paid in cash or in-kind. The investment provides KDP with an ownership stake of approximately 30%, making KDP the largest investor in Nutrabolt behind its founder, chairman, and CEO, Doss Cunningham. Net of the anticipated cash tax benefits, the investment represents a multiple below 4x estimated 2023 net sales, which are expected to be above $650M. KDP also has the opportunity to earn additional equity tied to in-market execution and will have representation on the Nutrabolt board. In addition, the partnership provides KDP with rights to further increase its ownership stake under various capital raising scenarios.
"This partnership represents a win-win transaction between our two companies," said chairman and CEO Bob Gamgort. "KDP gains significant presence in the rapidly growing performance energy drink market and Nutrabolt gains access to a strategic investor with extensive sales and distribution capabilities to further accelerate its growth. We believe that bringing together the resources, talent and expertise of both companies will accelerate innovation and growth and drive significant value creation over time."
"We are extremely proud of this business and the team members who built it from the ground up and, with the assets and experience that KDP brings to the table, we are more confident than ever about the direction of the company and our vision for the future," said Cunningham. "This strategic partnership will supercharge C4 Energy's current growth trajectory by accelerating household penetration, enhancing distribution and strengthening our overall commercial capabilities. We will also be partnering with a talented and ambitious leadership team who shares our values, our competitive spirit and has a similar philosophy of disciplined growth and maximizing overall value creation."