Coca-Cola agrees to buy vitamin water maker Glaceau for $4.1 B

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ATLANTA – The Coca-Cola Co., which has been looking to expand its water and energy drink portfolio and jump-start sales in its struggling North America unit, said Friday it has agreed to buy Vitaminwater maker Glaceau in a cash deal valued at $4.1 billion.

The world’s largest beverage maker said the agreement to acquire privately held Energy Brands, Inc., known as Glaceau, provides Atlanta-based Coca-Cola with a strong platform to grow its active lifestyle beverages.

The transaction is expected to add to Coca-Cola’s earnings per share in the first full year following completion of the acquisition, Coca-Cola said in a statement.

Formed in 1996 and based in Whitestone, N.Y., Glaceau is the maker of Vitaminwater, Fruitwater, Smartwater and Vitaminenergy.

The deal to buy Glaceau, which will operate as a separate business unit within Coca-Cola’s North America segment, is expected to close in the summer. It is subject to regulatory review. The boards of both companies have approved the transaction.

Glaceau is an attractive acquisition for Coca-Cola because of its position in the enhanced water and energy drink categories, which Coca-Cola is betting will make up a large portion of the beverage industry’s volume and gross profit growth in North America through 2010.

Coca-Cola said Glaceau’s top three executives – founder and CEO J. Darius Bikoff, president Mike Repole and Chief Financial Officer Mike Venuti – intend to lead the business for at least three years, and that other key managers will remain.

A spokeswoman for Glaceau, Nina Fiddian-Green, declined to discuss her company’s corporate structure and financial information, and she referred questions to Coca-Cola.

Coca-Cola has been trying to improve sales in its key North America unit. The company reported a 14 percent increase in first-quarter profit on a double-digit rise in overall sales, though in North America unit-case volume declined 3 percent in the quarter.

In announcing the deal to buy Glaceau, Coca-Cola executives repeated their effort to re-ignite growth in North America.