Pepsico, an American multinational food company and parent company of Pepsi, announced Wednesday that it entered into an agreement to buy Las Vegas-based energy drink maker Rockstar for $3.85 billion.
Rockstar Energy offers an extensive line of caffeinated canned drinks, many of which are low in calories and sugar.
"As we work to be more consumer-centric and capitalize on rising demand in the functional beverage space, this highly strategic acquisition will enable us to leverage PepsiCo's capabilities to both accelerate Rockstar's performance and unlock our ability to expand in the category with existing brands such as Mountain Dew," said PepsiCo Chairman and CEO Ramon Laguarta in the company’s Wednesday press release.
The purchase enables Pepsi to capture more consumers who shift from sugary sodas in favor of seemingly healthier teas and coffees with no added sugar.
Pepsi's energy drink portfolio includes Mountain Dew's Kickstart and GameFuel for video gamers. The company has had a distribution agreement with Rockstar in North America since 2009.
The food and beverage giant said that if regulators approve the deal, it is expected to close in the first half of 2020.
According to the Reportlinker, the global energy drinks market size was valued at $53.01 billion in 2018, and is expected to reach $86.01 billion by 2026.
PepsiCo generated more than $67 billion in net revenue in 2019, driven by a complementary food and beverage portfolio that includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. PepsiCo's product portfolio includes 23 brands that generate more than $1 billion each in estimated annual retail sales.
Rockstar, founded in 2001, makes 30 variations of canned drinks that are sold in convenience stores and grocers in more than 30 countries. The beverages are popular among athletes and performers.