Feb 20 (Reuters) - Celsius Holdings ( CELH ) said on

Thursday it would buy health and wellness drinks brand Alani

Nutrition in a $1.8 billion deal through a combination of cash

and stock, boosting its portfolio to build on the growing demand

for sports and energy beverages.

Alani Nutrition, a female-focused brand that delivers

functional beverages and wellness products, was founded in 2018

and will be acquired from its co-founders, Katy Schneider and

Haydn Schneider, and its operator, Congo Brands, Celsius said.

Energy drinks have largely become a popular beverage among

the younger population in the U.S. in recent years as more

people turn to fitness and lifestyle products, prompting

companies to pursue deals in the sector.

PepsiCo ( PEP ) paid $550 million in 2022 for an 8.5% stake

in Celsius.

In October, Keurig Dr Pepper ( KDP ) said it was buying a

60% stake in energy drink maker Ghost for $990 million, with

plans to purchase the remaining stake in 2028.

With the addition of Alani Nutrition, the combined Celsius

platform is expected to generate about $2 billion in annual

sales. For fiscal 2024, Celsius reported $1.36 billion in

revenue, a 3% rise compared to the previous year.

"Strategically this deal makes good sense, as Alani is one

of the fastest growing brands in energy with meaningful

distribution whitespace," said Needham analyst Gerald

Pascarelli.

"On a combined basis, the company will now have a

low-to-mid-teens share of U.S. energy (market)," he added.

The deal includes a net purchase price of $1.65 billion and

$150 million in tax assets, said Celsius.

The price consideration comprises $1,275 million in cash, a

$25 million earn-out and $500 million of newly issued restricted

shares of Celsius stock, representing an 8.7% pro-forma

ownership, Celsius added.

Upon closing, Alani Nutrition will operate within Celsius,

and key members of the Congo Brands leadership team would

continue as advisors to the company, Celsius said.

The Wall Street Journal first reported the news on Thursday.