|Long Island Brand Beverages makes premium bottled iced tea.|
WAYNESBORO, GA. — Cullen Agricultural Holding Corp. and Long Island Brand Beverages L.L.C. are combining businesses to expand in the ready-to-drink tea category.
Long Island Brand Beverages, Hicksville, N.Y., manufactures premium bottled iced tea beverages that are sold primarily on the East coast. Under the merger agreement, former members of Long Island Brand Beverages will receive an aggregate of 39,500,000 shares of common stock, or approximately 63% of the combined company, and Cullen shareholders will own the remaining 37%.
The transaction is expected to close in the first quarter. The combined company, named Long Island Tea Corp., will be led by Philip Thomas, chief executive officer of Long Island Brand Beverages.
“Consumers are looking for healthier beverages and iced tea is increasingly filling that need, but there is significant room within the iced tea category for better products,” Mr. Thomas said. “Our passion is offering consumers a healthier iced tea alternative using premium ingredients at an affordable price. We believe combining our business with Cullen will allow us to continue to build our brand awareness and offer broader distribution to make access to our teas easier for even more consumers.”
The ready-to-drink tea category has grown 6.1% annually from 2009 to 2014 and is forecast to grow more than 10% annually during the next five years, according to research from IBISWorld. Sales in the segment were projected to reach $5.3 billion in 2014. Although the top four players account for approximately 45% of the market, the category increasingly has become fragmented and more inviting to new entrants.“The segment is growing quickly as teas edge out other bottled beverages that consumers consider unhealthy,” said Paul Vassilakos, c.e.o. of Cullen. “We believe favorable market dynamics and consumer trends combined with Long Island Iced Tea’s premium ingredients, bold taste and strong brand awareness will enable it to maintain strong growth in the Northeast and expand to other markets in the future.”