Celsius Holdings Stock Pops on PepsiCo Acquisition Speculation
Shares of beverage company Celsius Holdings (NASDAQ: CELH) were up 11% as of 2:40 p.m. ET on Thursday after Stifel analyst Mark Astrachan suggested that industry giant PepsiCo (NASDAQ: PEP) could move to acquire the company, according to The Fly. For its part, Pepsi stock was little changed on the news, up just 1%.
Barriers to entry in the beverage space are relatively low, allowing many newcomers to enter the space. However, the big players like Pepsi and The Coca-Cola Company do have a competitive advantage when it comes to distribution. Smaller players often have to sign distribution agreements with the bigger players, which was the case for an energy-drink player that's been gaining market share: Bang.
Bang had signed a distribution deal with Pepsi. But yesterday, Bang management announced it's officially moving away from Pepsi as a distribution partner. For Stifel's Astrachan, this means Pepsi might move to fill the void with a more direct competitor to Bang's products. And that's where Celsius Holdings comes in. For Astrachan, Pepsi could greatly increase Celsius' distribution.
Source Fool.com
