Scottsdale, Ariz.-based The Alkaline Water Co. Inc. and Los Angeles-based AQUAhydrate announced they have entered into a definitive agreement and plan of merger under which Alkaline will acquire all of the issued and outstanding shares of common stock and preferred stock of AQUAhydrate in an all-stock transaction.
The transaction is expected to provide significant strategic and financial benefits to Alkaline, AQUAhydrate and their shareholders including the following:
- High profile investors and Board members: AQUAhydrate’s investors and board members include high-profile celebrities Mark Wahlberg, Sean “Diddy” Combs and Jillian Michaels who have entered into new endorsement agreements with Alkaline and AQUAhydrate. The combined social media reach of Alkaline, AQUAhydrate and the investors is expected to exceed 74 million followers across Facebook, Twitter and Instagram, the companies say.
- Unique Positioning in the capital markets: The combined company following the transaction will present a unique opportunity as a premium water company for the investment community. The combination of both brands and all of the respective professionals from both organizations will allow the combined company to attract institutional investor interest and analyst coverage from across North America and ignite the retail investor community.
- Brand extension and cross selling: Alkaline has a strong pipeline of brand extensions and new products that it has been developing during the past several months, including flavored waters, CBD products and some alternative packaging options, it says. Management believes that this merger will strengthen those investments by targeting these new products to each brand’s unique consumer target market (families for Alkaline88 and active lifestyle/athletes for AQUAhydrate). Further, post-acquisition, the combined company is expected to create differentiation across new products within each brand to justify the expanded shelf space, it says.
- Retail buyer synergies: Alkaline plans to consolidate its sales organization and provide retail chain buyers with one point of contact for both brands. The company’s research shows each brand is positioned against different consumer targets and Alkaline88 and AQUAhydrate will continue to be promoted at the retail level focused on their targeted consumer separately, it says. Being able to present two brands with distinct consumers to retailers gives the combined company a level of category leadership that many other competitors are unable to deliver, it adds.
- Production and logistical advantages: Natural synergies will allow AQUAhydrate to expand its distribution across the country by leveraging the existing Alkaline88 broker network and its current co-packer relationships, resulting in immediate cost savings and economies of scale, it says.
“This is an extremely exciting time for all The Alkaline Water Co. stakeholders as we welcome a new shareholder base that includes significant celebrity investors, partners, brand ambassadors and board members, to create a leading national presence in the premium water category with two powerful brands: Alkaline88 and AQUAhydrate,” said Aaron Keay, chairman at The Alkaline Water Co., in a statement.
“Alkaline88 recently reported a fifth consecutive year of 50 percent year-over-year growth, additions to its product portfolio of flavored-infused waters and additional sizes to its water portfolio with a modest marketing budget,” Keay continued. “Our CBD-infused health drinks will place us on the map within the rapidly growing market, and through education and our ambassador program, will make us a strong competitor for this $22 billion category by 2021. We view the acquisition of AQUAhydrate as extremely synergistic and accretive, and look forward to working closely with new director nominees Ira Tochner from leading investment firm Yucaipa who invested over $27 million in AQUAhydrate and investor Matthew Howison of Emerald Partners; as well as investors Sean ‘Diddy’ Combs and Mark Wahlberg, who have personally invested over $20 million into the development and growth of AQUAhydrate and brand ambassador Jillian Michaels. We believe that collectively, the board of directors, management teams and ambassador strength of the combined company has the opportunity to be the market leader in the premium water category and in the new platforms of products we will be rolling out under both brands.”
The transaction is expected to close later this year.