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Reed’s set to purchase Jones Soda

March 9, 2010

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Reed’s Inc., Los Angeles, has made an offer to acquire Jones Soda Co., Seattle, for a combination of $2.56 million in cash and 4.5 million shares of Reed’s common stock.

Under a letter of intent, the two companies have until April 5 to negotiate a final agreement, and a merger would have to be approved by shareholders of both companies.

A merger would allow the companies to streamline some aspects of its business, including administration, operations and customer interface, the companies said.

“We have watched Jones for years and have been impressed with its innovative marketing programs, strong brand recognition and customer following,” said Chris Reed, Reed’s founder, chairman and chief executive officer, in a statement. “I am confident that our portfolio of brands will benefit from Jones Soda’s marketing savvy as well as its organization’s deep mainstream business relationships. At the same time, we believe our strong infrastructure and operational capabilities will help drive important efficiencies through Jones Soda’s supply chain.”

Jones Soda has been working over the past year to return to profitability, but the combination of the recession and the company’s capitalization has forced the merger, said Rick Eiswirth, chairman of the Jones Soda Co. board, in a statement. The company also announced that Joth Ricci, Jones Soda’s chief executive officer, will step down on April 2 to pursue other business opportunities.

“After evaluating a range of strategies aimed at improving our outlook, our board of directors determined that the proposed merger with Reed’s offers our shareholders the most compelling long-term benefits of the available alternatives,” Eiswirth said in a statement.

If the companies complete the merger, Jones Soda shareholders would receive about 0.17 of a share of Reed’s common stock per share of Jones Soda common stock and cash of $0.10 per share, the company said.

If Reed’s cannot secure all or part of the cash, the deficit would be paid in additional shares of Reed’s common stock equal to the cash deficit divided by $1.70, Reed’s said.


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