The board of directors for Dr Pepper Snapple Group (DPSG) recently authorized an investment of up to $2 million in HYDRIVE, an amount which could increase its stake in the energy drink company to 40 percent, according to an SEC filing. The actual amount of the investment and DPSG’s total equity in HYDRIVE will be negotiated between the two companies within a few weeks.
To approve the investment, DPSG’s board waived a conflict-of-interest rule. Michael Weinstein, a co-founder of Inov8, the parent company of HYDRIVE, is also a director of DPSG. Weinstein holds a stake of more than 40 percent in the Rye, N.Y.-based company.
While its current equity position in HYDRIVE was in exchange for meeting various distribution targets, DPSG’s desire to raise its stake was based on the overall performance of HYDRIVE and its growth trajectory, according to Brian O’Byrne, the CEO of HYDRIVE.
“We’ve grown quickly through private investment, and DPSG thinks that it can help grow the company even faster,” O’Byrne said. “The investment will put HYDRIVE into a more favorable position because it is [now] an equity brand.”
Though DPSG currently handles 90 percent of its distribution, O’Byrne stated that the investment will enable HYDRIVE to expand its reach to DPSG’s independent bottlers not currently aligned with the brand. HYDRIVE is sold in approximately in 30,000 stores in 80 percent of the country, and as a result of DPSG’s investment, the company expects to have a full national presence sometime in 2012.
In addition to authorizing the investment in HYDRIVE, DPSG’s board also gave its management the ability negotiate an “arms length” agreement with HYDRIVE that will provide product development services to further advance the flavor and functionality of the product.