Wall St. and Business Wednesdays: “50 Cent” Gets Piece of Coke’s $4bil Deal by Alexis McCombs
Coca-Cola North America recently announced it has reached an agreement to acquire Energy Brand Inc, which is the parent company of glacéau beverages and the makers of Vitaminwater. The total purchase price is $4.1 billion.
Standing to profit from the acquisition is rapper Curtis “50 Cent” Jackson. The platinum recording artist has minority ownership in Vitaminwater. He created his own grape-flavored Formula 50, and is currently starring in one of the beverage maker’s TV ads.
Glacéau spokesman Nina Fiddian-Green declined requests for specifics on the rapper’s deal and Jackson was unavailable for comment but sources report Jackson has 10 % ownership of the company.
According to William Thomason, Managing Partner of Taurum Capital, LLC and BE’s Stock Sense columnist, “50 may have negotiated ownership in lieu of salary when his endorsement deal was worked out. If so, it was a smart move and more athletes and entertainers should take note in going this route. The long term payoff could be more rewarding.”
The second scenario is “50 may have been an angel investor that helped get the company off the ground. This is [usually a wealthy] individual who comes into an opportunity and has enough money to risk without effecting their net worth. Often financial advisors will suggest that their clients invest 10-15% of their portfolio in alternative investments which include hedge funds, private equity, venture capital, or these angel investments,” he says.
Overall beverage companies have done well and investing in a start up can allow someone to own something for less than what it is selling in the market.
Furthermore, small independent bottlers with unique qualities are acquisition targets.
The Vitaminwater product contains antioxidants and nutrients, which the company claims are sometimes absorbed better and faster than those in a traditional meal. This distinctive attribute helped make the company a viable investment in a competitive industry. “Either way it was a smart move by 50,” said Thomason.
Jackson will help launch a Vitaminwater energy drink later this year and is in negotiations to attach his name to an established vitamin and supplement company. The brand will target males 14-28 who make purchases at GNC and The Vitamin Shoppe.
Pending regulatory approval, the Coca-Cola deal is expected to close sometime during the summer.
Editor's Note: This article first appeared in Black Enterprise Online (http://www.blackenterprise.com/default.asp)
Wednesday, June 13, 2007