Leading Brands Inc. buyout worth $20 a share?
Coca-Cola Leading Brands Inc. (LBIX) - Beverage Buyout Talks make sense. The whirlwind of recent beverage buyouts may continue with net income on the rise at Leading Brands. It's important to note that Leading Brands is a relatively safe investment and over the relatively short term should rise to over $10 a share. Buying sooner than later makes perfect sense. PepsiCo and Coca-Cola have bought out smaller beverage companies in the past.
With health scares sparking a number of investigations at the state and federal level into the energy drink's role in several fatalities in the beverage industry expansion into healthier beverages makes perfect sense.
Private-equity firms backing healthy beverage brands are pushing the spurt of strategic buyers. They point to the needs for new brands with a healthy appeal. "They're all trying to rejigger their product portfolios to more healthy products," said Mike Chase, a managing director at Health Business Partners, a boutique investment bank in Warwick, R.I.
Acquiring a small company that can be plugged into a larger distribution pipeline is a better bet than developing a brand from scratch.
"Pepsi and Coke don't make acquisitions of these beverage companies because they can," said Scott Van Winkle, a managing director at investment bank Canaccord Adams Inc. "They see the need."
That can pay off handsomely for buyout firms, as large drink companies can pay high multiples for smaller drink brands since sales will likely spike after the acquisition once the brand is plugged into a larger distribution network.
Look for LBIX Shares to be one of the best performing stocks for the remainder of 2013/2014.