Coca Cola said it had agreed to buy Glaceau, the maker of Vitamin Water, for $4.1bn in the latest stage in the drinks giant's efforts to expand its portfolio of still drinks and give a lift to its struggling north American business.
Coke has been slower than PepsiCo, its fierce rival, to extend its reach beyond fizzy drinks into non-carbonated beverages, such as bottled water and energy drinks.
The market for still and energy drinks has been growing much faster than the mature carbonated market in north America. Increasingly health conscious consumers have started to shun products they perceive to be bad for them.
In an effort to catch up, Coke has been focusing on developing new products and on acquisitions.
"This will help us with our clearly declared goal of winning in north America," said Neville Isdell, chief executive.
Tata, the Indian conglomerate, bought a 30 per cent stake in Glaceau last year for $677m, based on an enterprise value of $2.2bn for the company, Coca-Cola said.
Muhtar Kent, Coke's chief operating officer, said: "Of course it's a high price, you may think". But the company said that it saw great growth potential for Glaceau in the south and centre of the US, as well as internationally. It already has a big presence on the east and west coasts.
The agreement to buy Glaceau, also known as Energy Drinks, comes shortly after the purchase of Fuze Beverages, a US maker of teas and juices, to close the gap with PepsiCo's broader portfolio.
The main products of Glaceau, which was set up in 1996, are "enhanced water" products and Smartwater, a bottled water brand. It will operate as a separate business unit within Coca Cola's north American branch. The top three executives at Glaceau will stay on for at least 3 years after the deal.
The all-cash deal is expected to close in mid-June, and Coke said it would add to earnings by the end of next year.
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