PepsiCo has increased its stake in Celsius Holdings through a $585 million deal, as the soda and snacks maker strengthens its energy drink business amid shifting consumer preferences.
Shares of Celsius, which owns a namesake energy drink and other hydration brands, jumped 7% in premarket trading on Friday. They have more than doubled in value this year.
PepsiCo has bought 5% in Celsius’ preferred stock, bringing its stake to about 11% after conversion. The company had paid $550 million for an 8.5% stake in Celsius in 2022.
Celsius has carved out a strong following for its low-calorie, vitamin-infused drinks, as health-conscious consumers increasingly turn away from sugary sodas.
“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 …,” Ram Krishnan, CEO PepsiCo Beverages U.S., said in a statement.
Beverages makers have been pursuing energy and non-soda brand deals, driven by growing interest in fitness and lifestyle products.
PepsiCo said in March it would buy prebiotic soda brand Poppi for nearly $2 billion to boost its “better for you” product portfolio.
Last year, Keurig Dr Pepper bought a 60% stake in energy-drink maker Ghost for $990 million to spruce up its refreshment beverages portfolio.
Celsius, which is based in Florida, on its part bought peer Alani Nutrition in an $1.8 billion deal earlier this year.
As part of the latest deal, PepsiCo will lead distribution for all three energy drink brands in the U.S. and Canada — Celsius, Alani Nu and Rockstar Energy. PepsiCo will continue to own the Rockstar Energy brand internationally.
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