By Matthew Monks and Crystal Tse

Celsius energy drinks at a store.

(Bloomberg) -- PepsiCo Inc. is increasing its stake in Celsius Holdings Inc. in a $585 million deal that will boost distribution of some of the energy-drink maker’s popular beverages, according to people familiar with the matter.

PepsiCo is set to announce as soon as Friday that it’s buying convertible preferred stock in Celsius that would boost its ownership to 11%, the people said. As part of the transaction, Celsius will acquire PepsiCo’s Rockstar Energy brand in the US and Canada, according to the people, who asked to not be identified because the information is private.

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Celsius’ recently acquired female-focused energy drink Alani Nu will move to the PepsiCo distribution in those two countries as well in a bid to accelerate its growth by increasing retail availability, the people said. The moves mean Celsius will be the strategic energy lead for PepsiCo in the US, managing the Celsius, Alani Nu and Rockstar Energy brands, while PepsiCo will lead distribution for the Celsius portfolio in that market, the people said.

PepsiCo initially paid $550 million in 2022 for an 8.5% interest in Celsius through a preferred stock deal. Under the latest agreement, it’s extended the conversion period for that initial holding to match the new investment and will get the right to nominate another director to Celsius’ board, according to the people.

PepsiCo will continue to own the Rockstar Energy brand internationally, the people said. Representatives for PepsiCo and Celsius couldn’t immediately be reached for comment.

Founded in 2004, Celsius has grown swiftly thanks to the popularity of its vitamin-infused drinks that help burn calories. Its shares jumped earlier this month when second-quarter sales exceeded expectations, thanks to the addition of Alani Nu.

Celsius shares were little changed on Thursday, closing at $59.69 for a market value of about $15.4 billion.

PepsiCo’s portfolio of sports-related beverages include Gatorade, and CytoSport. With a range of other products like breakfast cereals and fruit juices, the company has been working to adapt to a trend toward healthier, less processed foods.

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