Coca-Cola buys full control of Bodyarmor for $ 5.6 billion

Ryan Blaney, # 12 BodyArmor Ford driver, celebrates victory in Ruoff Mortgage after winning the NASCAR Coke Zero Sugar 400 Cup Series at Daytona International Speedway on August 28, 2021 in Daytona Beach, Florida.

Jared S. Tilton | Getty Images

On Monday, Coca-Cola announced it had acquired full control of sports drink maker Bodyarmor for $ 5.6 billion, making it the brand’s largest acquisition to date.

The beverage giant bought a 15% stake in Bodyarmor in 2018, making it its second largest shareholder. At the time, basketball legend Kobe Bryant was the company’s third-largest shareholder after investing in Bodyarmor in 2013, just two years after its founding. The estate of the late NBA star will receive about $ 400 million from the sale. according to The Wall Street Journal

The deal for the remaining 85% of Bodyarmor is not unexpected. Coke first announced in February that it intends to buy back a majority stake in Bodyarmor later this year, after filing filings with the FTC.

Owning Bodyarmor helps Coke gain market share in the sports drinks category, although PepsiCo’s Gatorade is undoubtedly the market leader with roughly 70% market share. Touting itself as a healthier sports drink, Bodyarmor surpassed Coke’s Powerade to become the second largest player in the category. Retail sales of the sports drinks brand are expected to be over $ 1.4 billion this year, up about 50% this year, according to Coke.

As part of the deal, Bodyarmor co-founder Mike Repole will partner with the company’s still beverage portfolio. Repol also founded the Vitaminwater, Smartwater and Energy brands, which are now owned by Coke. Repole and BodyArmor President Brent Hasti will also assist Bodyarmor in its quest to overtake Gatorade.

“After I spoke to [Chairman and CEO James Quincey], I asked him if I could be the chairman of the board. I think he muted me after that, “Repol told Sara Eisen on Monday on Squeak in the Street.” But I was not afraid to ask, so I will do my best to get on the board. “

Repole said his plan to act as a consultant on other parts of his portfolio is a sign that Coke wants to act differently. He will share ideas on how to improve Coke’s marketing, packaging and innovation.

Consumer Edge Research analyst Brett Cooper wrote in a memo released Monday that it will be difficult to quantify Repole’s involvement with Coke, but it is more likely to be positive than negative given its past successes.

Ahead of the confirmation of the deal, Credit Suisse analyst Kaumil Gajravala wrote on Friday in a note that he expects the acquisition to be positive for Coke, citing Body Armor brand equity and Coke’s potential to distribute its sports drinks around the world, as it did for Monster.

Coke has revised its own portfolio since the start of the coronavirus pandemic, killing drinks that sold poorly. This includes the short-lived Coca-Cola Plus Energy drink in North America this spring. At the same time, under Quincy’s leadership, the company aims to offer a broader range of beverages.

The Bodyarmor deal is the largest acquisition of the Coke brand, surpassing the 2018 acquisition of Costa Coffee for $ 5.1 billion.

Coke’s shares are up 2% this year, bringing the company to a market value of $ 242 billion. Shares fell less than 1% in morning trading.

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