LOS ANGELES Two beverage makers have signed a letter of intent to merge their businesses.
Reed's and Jones Soda announced said the proposed merger would combine the two, with Reed’s as the surviving company. In a joint statement, the companies said the merger would "provide the two companies with the opportunity to realize the potential benefits of increased size and scale, as well as cost efficiencies in several aspects of the combined business, including administration, operations, and customer interface."
The non-binding provisions of the LOI contemplate a merger transaction in which Reed's would acquire Jones Soda for a combination of cash and Reed's common stock. The transaction also would be subject to approval of the shareholders of both Jones Soda and Reed's.
Chris Reed, founder, chairman and CEO of Reed’s stated, “We have watched Jones for years and have been impressed with its innovative marketing programs, strong brand recognition, and loyal customer following. 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.”
In related news, Jones Soda CEO Joth Ricci will be stepping down effective April 2, in order to pursue other business opportunities.
“I have truly enjoyed my time at Jones Soda and I’m pleased with the work our team has done to improve many aspects of our business. Unfortunately, due to the current market conditions, it has taken longer than anticipated to produce the necessary top line results to effectively return to profitability and stem our cash burn. However, I remain confident in the strength of the Jones Soda brand and believe the proposed merger with Reed’s provides Jones Soda an improved platform from which to capitalize on its future prospects and is in the best interests of its shareholders.”