Dr Pepper Snapple to acquire Bai Brands for $1.7B in cash
Dr Pepper Snapple announced that it has reached an agreement to acquire Bai Brands and its complete portfolio of high-growth premium antioxidant infused beverages. The cash purchase price of $1.7B includes a tax benefit of approximately $400M on a net present value basis and will be financed through new unsecured notes and short term commercial paper. We expect to maintain our strong investment grade credit profile and have no plans to change our existing shareholder dividends and share repurchase distributions. 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 $425M in net sales in 2017 and add an incremental $132M to our current net sales expectation for 2017. The transaction is expected to be approximately 3c dilutive to reported diluted EPS in 2017 driven by planned increases in marketing investments behind the brand and increased interest expense associated with the financing of the purchase price. The transaction is expected to be accretive to reported diluted EPS in 2018.