PepsiCo has agreed to pay $3.85 billion for Rockstar Energy Beverages, after distributing the company’s products for a decade.
The deal will give PepsiCo the No. 3 brand of energy drinks in the U.S., behind Red Bull and Monster. Rockstar, founded in 2001, was the first energy drink to come in 16-oz. cans, which are now standard in the category.
Buying Rockstar will free PepsiCo to initiate synergy with its other products, especially its Mountain Dew brand. Distribution deals can lead to tensions when the distributing company wants to compete directly with its partner, which Coca-Cola discovered when it launched a line of energy drinks while distributing, and holding a stake in, Monster products.
The Rockstar deal gives PepsiCo a stronger position in the energy-drink market, which is growing while sales of standard carbonated soft drinks remain flat.