To juice up its offerings, Coke buys Odwalla
The Associated Press
ATLANTA _ Coca-Cola, extending its reach into the growing market for noncarbonated drinks, said yesterday is it buying the premium juice maker Odwalla for $181 million.
California-based Odwalla, which makes juice blends, smoothies and other fortified health drinks, will retain its current management and become part of Coke's Minute Maid juice division.
For Atlanta-based Coke, the world's largest soft-drink company, the deal means a bigger piece of the "good-for-you beverage area," said John Sicher, editor of Beverage Digest, an industry publication.
"It's a very smart deal for Coke," he said. "It's easier to take a small brand that already has some real consumer following and make it into a bigger brand than to start from scratch."
Odwalla has generated revenue of nearly $98 million for the first nine months of the year, up from $60.5 million in the same period a year earlier.
Coke will pay $15.25 a share in cash for all of Odwalla's outstanding common stock. The boards of Coke and Odwalla approved the deal yesterday.
Odwalla shares climbed 27.9 percent, or $3.30 a share, to $15.13 in trading yesterday. Coke shares fell 45 cents to $48.16.
Odwalla, based in Half Moon Bay, Calif., markets its drinks under the Odwalla and Samantha labels. Its chief executive, Stephen Williamson, said "the entrepreneurial spirit of Odwalla will be nurtured by the opportunity for growth that this new relationship presents."
Don Short, chief executive of Minute Maid, said acquiring Odwalla strengthens Coke's opportunity for growth in new beverage categories.
Coke recently scrapped a deal with Procter & Gamble to jointly market products such as Minute Maid juice and Pringles potato chips.
Odwalla merged last year with Maine-based Fresh Samantha. The companies offer more than 45 juices, smoothies, dairy-free milk and shakes, spring water and natural food bars.
Odwalla's image was tarnished about four years ago by a E. coli outbreak linked to its juice. A Colorado girl died and others were sickened by the bacteria in the company's unpasteurized apple juice.