Keurig Dr Pepper to acquire Ghost Lifestyle and Ghost Beverages, sees accretion

Keurig Dr Pepper (KDP) announced that it has entered into a definitive agreement to acquire Ghost Lifestyle and Ghost Beverages. Founded in 2016, Ghost is a lifestyle sports nutrition business with a portfolio anchored by Ghost Energy, a ready-to-drink energy brand. Under the terms of the agreement, KDP will initially purchase a 60% stake in Ghost, which will be followed by the acquisition of the remaining 40% stake in 2028. The transaction is subject to customary closing conditions, with the initial step expected to close in late 2024 or early 2025. Ghost will continue to be led by co-founders, Dan Lourenco and Ryan Hughes, and will operate as part of KDP’s U.S. Refreshment Beverages segment. The proposed transaction will substantially enhance KDP’s presence in the energy drink category, extending its reach to new consumers. The company will fully consolidate Ghost into its financial results upon close and expects the transaction to be neutral to modestly accretive to adjusted EPS starting in 2025. In the first stage of the transaction, the company will make an initial cash investment of approximately $990M in exchange for a 60% ownership stake in Ghost. Net of anticipated cash tax benefits with a net present value of approximately $140M, the enterprise valuation at this step represents an approximate 3x net revenue multiple on a projected 2024 basis. In the second stage of the transaction, KDP will purchase the outstanding 40% stake in 2028 at a pre-negotiated valuation scale that will reflect Ghost’s 2027 financial performance. Starting in mid-2025, KDP also expects to invest up to $250M to transition GHOST Energy’s existing distribution agreements ahead of beginning to sell and distribute the brand through the company’s direct store delivery network.