PepsiCo (NASDAQ: PEP) announced that it had entered into a long-term distribution agreement with energy drink maker Celsius Holdings (NASDAQ: CELH),worth $500 million.
The soft drink giant will become the preferred distribution partner globally for Celsius and will also nominate a director to serve on its board.
Shares of Celsius jumped as much as 16% in New York. The stock had been climbing recently amid analyst speculation that PepsiCo could switch to Celsius after ending a distribution pact with Bang Energy.
Celsius is expecting to gain more shelf space in existing retailers and expand more into independent stores, such as gas stations. A statement noted that Pepsi will assist with the distribution starting Monday.
For Pepsi, the deal helps strengthen its ties to energy drinks. The category is one of the fastest growing beverage segments outside of alcohol, and Pepsi has been doubling down on energy drinks in recent years as soda consumption falls.
Source - Celsius Holdings
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