Coca-Cola Co. will announce today that it is purchasing Glaceau for $4.2 billion in cash and Coke stock, according to an executive involved in the negotiations. Coke's board reportedly approved the
acquisition last night. Coke executives declined to comment.
The jewel of Glaceau is Vitaminwater, which is vitamin-fortified and offered in flavors. It is among a fast-growing category
known as functional foods, which market themselves as offering an additional benefit beyond basic nutrition. Kiwi-Strawberry flavored Vitaminwater, for example, promises "focus" and "healthy support
for eyes and skin." Glaceau also makes Fruitwater, an energy drink called Vitaminenergy and Smartwater, which contains electrolytes.
While the price tag is substantial for a company with
earnings in 2006 of about $350 million, analysts said the cost in avoiding the deal--given Coke's relatively weak position in noncarbonated beverages--could also be high. PepsiCo's share of the
noncarbonated beverage industry in the U.S. is 50%; Coke's is 23%, according to Beverage Digest.
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