Coca-Cola Buys BodyArmor for $5.6 Billion

Issue 95

Coca-Cola Co. is buying full control of BodyArmor in a deal that has a valuation of $5.6 billion. Coke already owns a 15% stake in BodyArmor that was purchased in 2018 for $300 million when the company had a valuation of $2 billion, Coke then took over the distribution of BodyArmor which allowed them to obtain another 15% of the company. Since then, the company has grown to have a total valuation of $8 billion.

Coke has high hopes for the continual success of BodyArmor as several NBA and MLB athletes have agreed to help market the product. James Harden and Mike Trout both invested in the company as well as Kobe Bryant being an early backer of the product.

The growth of BodyArmor has created tension within the sports drink industry as Gatorade has growing fears of BodyArmor’s continued success. While Gatorade still dominates the market, BodyArmor expects to generate $1.4 billion in sales this year. This would be a significant jump from the company's $250 million yearly sales in 2018 when Coke first invested in BodyArmor.

BodyArmor still has a long way to go to be a serious contender to Gatorade as Gatorade dominates the market by accounting for 64% of sports drink sales, however, BodyArmor has reached 2nd place by accounting for 18% of the market.

This acquisition will be the largest in Coke’s history surpassing the 2018 acquisition of Costa Coffee for $5.1 billion.

Source: Bloomberg