Coca-Cola buys full control of Bodyarmor for $5.6 billion
Ryan Blaney celebrates after winning the NASCAR Cup Series Coke Zero Sugar 400 at Daytona International Speedway in Daytona Beach on August 28, 2021.
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Coca-ColaIt announced Monday that it had purchased Bodyarmor, the largest sports drinks maker in history for $5.6 billion.
This beverage mogul bought 15% of Bodyarmor’s stock in 2018 and became the second-largest shareholder. After investing in Bodyarmor just two years ago, Kobe Bryant, a basketball star was the third largest shareholder. The sale will bring in more than $400million for Bryant’s family. according to the Wall Street Journal
It is not surprising that Bodyarmor has agreed to buy the remaining 85%. Coke initially stated in February in a Federal Trade Commission filing that it planned to purchase a controlling share in Bodyarmor late in the year.
Coke owning Bodyarmor will help it gain market share for the sports drink segment, however PepsiCo’sGatorade holds a market share of 70%, making it the clear market leader. Bodyarmor, which is a healthy sports drink, has overtaken Powerade by positioning itself to be the market leader in this category. Coke estimates that the brand’s sales of sports drinks are over $1.4 billion. This is an increase of about half a percent.
Mike Repole (Co-founder, Bodyarmor) will be working with Bodyarmor on its still drinks portfolio. Repole was also the co-founder of Vitaminwater Smartwater and Energy Brands. These brands are all now part of Coke. Brent Hastie from BodyArmor will continue to support Bodyarmor’s quest for overtaking Gatorade.
Kaumil Gajrawala, Credit Suisse’s analyst, wrote to his clients on Friday, saying that he believes the acquisition would be a positive move for Coke. He cited Body Armor’s brand equity as well as the possibility for Coke’s sports drinks to be distributed globally.
Cocake was overhauling its own portfolioSince the outbreak of the pandemic the government has been removing any drinks not selling well. This includes the short-lived Coca-Cola Plus Energy beverage in North America, which was discontinued this spring. Under CEO James Quincey the company is also striving for a wider range of beverages.
Coke’s biggest acquisition is the Bodyarmor purchase, surpassing its 2018 Costa Coffee deal for $5.1 Billion.
Coke shares have increased by 3% in the past year to $244 billion, making it the market’s largest shareholder.