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    Dr Pepper Snapple Expands Better-For-You Portfolio

    Beverage maker reaches $1.7B deal with Bai Brands LLC.

    PLANO, Texas — Dr Pepper Snapple Group Inc. (DPS) reached an agreement to acquire Bai Brands LLC for a cash purchase price of $1.7 billion.

    According to DPS, Bai provides a strong platform to incubate and grow better-for-you beverages throughout the non-carbonated and carbonated beverage sectors. It is expected to generate approximately $425 million in net sales in 2017 and add an incremental $132 million to the company's current net sales expectation for 2017. 

    "We're excited to welcome Bai into our family of great brands," said Larry Young, DPS president and CEO. "In a relatively short time, Bai has carved out a leadership position in the enhanced water category and has now extended that success into other fast-growing and profitable categories. 

    "We're equally impressed with their innovation pipeline, which will continue to meet the needs of consumers seeking great tasting, low-calorie beverages with natural flavors and no artificial sweeteners," Young added.

    DPS began broadly distributing Bai products in 2013 and in that time, it "has contributed greatly to our allied brand lineup" he said. "Adding it to the broad range of choices and options in our company-owned portfolio is a natural next step. Moving forward, we will empower Bai's management team to continue the breakthrough and disruptive branding and innovation that have revolutionized their categories and work with them to put the brand in front of more consumers in more places." 

    Bai's product portfolio spans across several high-growth beverage categories including enhanced water, carbonated flavored water, coconut water and premium ready-to-drink teas. With its Bai, Bai Bubbles, Cocofusion and other innovative brands, it is positioned for expanding growth in key beverage segments, according to DPS.

    Hamilton, N.J.-based Bai will operate within the packaged beverages segment and continue to be led by founder Ben Weiss.

    "Over the past seven years, Bai has proven to be an agent of change in a marketplace that is rapidly evolving," Weiss said. "We've worked tirelessly to challenge the notion that better-for-you beverages can't taste good. On our journey, we found a strong ally in DPS, an ally who embraced our mission to change the way the world drinks. Now, it only makes sense to continue our quest together. We are thrilled to join the DPS family and create a new path forward with infinite possibilities."

    The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2017. The boards of both companies have approved the transaction.

    According to Vivien Azer, director and senior research analyst at Cowen and Co., there has been speculation that Bai could be purchased by a competitor. Though the acquisition carries "a somewhat steep price tag, Bai has clearly been a meaningful contributor to growth, and better positions DPS' portfolio away from carbonated soft drinks."

    Credit Suisse Securities (USA) LLC is serving as exclusive financial advisor to Dr Pepper Snapple Group and Morgan, Lewis & Bockius LLP is acting as legal counsel. J.P. Morgan Securities LLC is serving as exclusive financial advisor to Bai and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel.

    Plano-based DPS has more than 50 brands, including six of the top 10 non-cola soft drinks. In addition, 13 of in 14 leading brands are No. 1 or No. 2 in their flavor categories. In addition to our flagship Dr Pepper and Snapple brands, the portfolio includes 7UP, A&W, Canada Dry, Clamato, Crush, Hawaiian Punch, Mott's, Mr & Mrs T mixers, Peñafiel, Rose's, Schweppes, Squirt and Sunkist soda.

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