Celsius Holdings (NASDAQ:CELH) investors headed off to the weekend in a good mood no doubt. Shares skyrocketed 29% in Friday’s session, fueled by a major announcement on Thursday afternoon.
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Celsius revealed plans to acquire wellness drinks brand Alani Nu in a blockbuster $1.8 billion deal ($1.65 billion net of tax assets). The acquisition, expected to close by 2Q25, will be funded through a mix of cash ($1.275 billion) and stock ($500 million or 22.5 million shares), with an additional $25 million earnout on the table if performance targets are met in 2025.
After accounting for tax assets, the $1.65 billion purchase price represents a 2.8x multiple on 2024 revenue and a 12x EBITDA multiple. The cash portion of the deal will be financed with $900 million in debt and $375 million from existing cash reserves. Following the transaction, CELH will still have $515 million in cash on its balance sheet, translating to a net leverage ratio of just 1.0x.
Mirroring investors’ enthusiasm, Needham analyst Gerald Pascarelli applauds the move.
“Strategically this deal makes good sense, as Alani is one of the fastest growing brands in energy with meaningful distribution whitespace and will provide accretive growth and scale benefits to CELH,” the analyst explained.
The combined company will now capture a low-to-mid-teens share of the U.S. energy market, thereby successfully surpassing a previously “elusive and unsustainable double-digit barrier.” Additionally, says Pascarelli, the deal will significantly expand its reach among female consumers – a key competitive advantage for Celsius as a standalone brand, given its approximately 50/50 demographic split.
That was not the only piece of good news. Separately, Celsius reported its Q4 earnings alongside the Alani Nu acquisition, delivering better-than-expected results on key metrics. While revenue fell by 4.3% year-over-year to $332.2 million, the figure came in 5.18 million above the Street’s forecast. Adjusted EBITDA totaled $62.9 million, surpassing the Street’s $40 million estimate while adj. EPS of $0.14 was 4 cents above the prognosticators’ call.
“We are encouraged by the acquisition of Alani and a better than feared earnings print and expect the shares to be rewarded handsomely as a result,” Pascarelli went on to add presciently.
With Friday’s surge, Celsius shares are now closing in on Pascarelli’s $38 price target, which still implies a 15% upside. He’s holding firm on his Buy rating. (To watch Pascarelli’s track record, click here)
8 analysts join Pascarelli in the bull camp and with an additional 5 Holds and 1 Sell, the stock claims a Moderate Buy consensus rating. At $35.46, the average price target makes room for 12-month returns of ~9%. (See CELH stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
