Pepsi Gets an Energy Boost From Buying Rockstar

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PepsiCo  (PEP) - Get Report is taking a big swig of Rockstar Energy, scooping up the energy-drink maker for $3.85 billion.

PepsiCo on Wednesday formally announced the deal, which will expand the beverage giant’s footprint in the high-demand and highly competitive energy-drink market.

The agreement includes $700 million of payments related to future tax benefits associated with the transaction, payable over up to 15 years, according to the companies.

The transaction, which is subject to typical closing conditions as well as regulatory approval, is expected to close in the first half of 2020. PepsiCo said it doesn't expect the deal to be material to its 2020 revenue or per-share earnings.

In addition to Rockstar, PepsiCo's energy portfolio includes Mountain Dew's Kickstart, GameFuel, and AMP. Coke, which owns a stake in Monster Beverage (MNST) - Get Report and distributes its products, recently launched an energy drink in the U.S. over Monster’s objections.

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