US: Reed's to acquire Jones Soda in merger deal
Reed's to swallow Jones Soda
Reed's is to acquire fellow US-based soft drinks group Jones Soda in a share and cash merger deal.
The two firms said today (9 March) that they have signed a letter of intent to merge, with California-based Reed's as the surviving partner.
Reed's will issue 4.5m common shares and pay out a collective US$2.6m in cash, equating to around $0.10 per share, to existing Jones shareholders.
The move is further evidence of a consolidation trend in the US soft drinks market, following recent deals by The Coca-Cola Co and PepsiCo to acquire their major bottlers in the country.
Jones has been hit particularly hard by a drop in consumer spending in the US recession.
"Over the past year we have taken numerous steps to reduce our expenses and reinvigorate our top line in order to return to profitability," said Jones Soda's chairman, Rick Eiswirth. "Unfortunately, the challenging economic environment combined with our current capitalisation has made it extremely difficult to operate on a standalone basis."
Together, Reed's and Jones will have soft drink brands such as Reed's Ginger Brew, Virgil's, and Jones Soda.
Chris Reed, founder, chairman and CEO of Reed's, said: "We have watched Jones for years and have been impressed with its innovative marketing programmes, strong brand recognition, and loyal customer following."
"We believe our strong infrastructure and operational capabilities will help drive important efficiencies through Jones Soda's supply chain," said Reed. "With minimal customer and demographic overlap between our combined brands, we believe this transaction also provides us with compelling merchandising and growth opportunities in the years ahead."
Jones Soda CEO Joth Ricci will step down on 2 April and will pursue other business opportunities, said the firms.
As laid out in the letter of intent, the companies have until 5 April to formally agree a merger deal. Until that date, Jones can walk away from the deal by paying up $75,000 of Reed's third party expenses.
Both sets of shareholders would need to approve the merger.
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