Reed's Inc. and Jones Soda agree to merge
March 9, 2010
by Eric Schroeder
LOS ANGELES — Reed’s, Inc., a maker of sodas sold in natural food stores nationwide, has agreed to merge with Seattle-based premium soda maker Jones Soda Co. in a combination of cash and common stock worth approximately $9.7 million.
As part of the merger, shareholders of Jones Soda stock would receive an aggregate of 4.5 million shares of Reed’s common stock and cash of 10c per share of Jones Soda common stock (or an aggregate of approximately $2.56 million based on current shares outstanding). Jones Soda stock was at 53c per share in early market trading on March 9, down 37% from the close of 84c on March 8 and down sharply from the 52-week high of $1.53 reached last April.
“We have watched Jones for years and have been impressed with its innovative marketing programs, strong brand recognition, and loyal customer following,” said Chris Reed, founder, chairman and chief executive officer of Reed’s. “I am confident that our portfolio of brands will benefit from Jones Soda’s marketing savvy as well as its organization’s deep mainstream distribution relationships. At the same time, we believe our strong infrastructure and operational capabilities will help drive important efficiencies through Jones Soda’s supply chain. With minimal customer and demographic overlap between our combined brands, we believe this transaction also provides us with compelling merchandising and growth opportunities in the years ahead.”
Reed’s sells its sodas in 10,500 supermarkets. Its beverage products include non-alcoholic Ginger Brews, Virgil’s Root Beer, China Cola and Sonoma Sparkler. The company also makes Reed’s Ginger Candies and Reed’s Ginger Ice Creams.
Rick Eiswirth, chairman of Jones Soda, said the merger offers its shareholders “the most compelling long-term benefits” among potential alternatives for reducing expenses and reinvigorating the company’s top line.
“We believe the combination of Jones and Reed’s will create a substantially larger beverage business with a more powerful operating platform and a brighter future,” Mr. Eiswirth said. “We are especially pleased that the Jones shareholders will be able to participate in the potential upside of the combined business, as a meaningful portion of the consideration is in the form of Reed’s stock.”
Founded in 1986, Jones Soda markets and distributes beverages under the Jones Soda, Jones Pure Cane Soda, Jones 24C, Jones GABA, Jones Organics, Jones Naturals, and Whoopass Energy Drink brands.
Jones Soda said Joth Ricci, who has been c.e.o. since May 2009, will step down on April 2 to pursue other business opportunities.