PepsiCo Inc (NASDAQ:PEP, ETR:PEP) reported on Friday that it has increased its ownership interest in Celsius Holdings (NASDAQ:CELH) in a $585 million convertible preferred stock deal.
After the conversion, PepsiCo will own about 11% of Celsius. The beverage giant paid $550 million for an 8.5% stake in Celsius in 2022.
Shares of Celsius moved up more than 5% to about $63 in early trade on Friday following the announcement.
The move comes as PepsiCo aims to strengthen its energy drink business.
“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 to serve different consumer cohorts,” PepsiCo Beverages US CEO Ram Krishnan said in a statement.
Celsius has been successful in building its brand of low-calorie, vitamin-infused drinks, which include CELSIUS HYDRATION and Alani Nu.
As part of the agreement, Alani Nu will move into the PepsiCo distribution system in the US and Canada.
In a corresponding move, Celsius will acquire the Rockstar Energy brand in the US and Canada from PepsiCo. PepsiCo will continue to own the Rockstar Energy brand internationally.
Celsius shares have surged about 131% year to date.