The latest example of a soft-drinks maker investing in products that are perceived to be healthier.

Dr Pepper Snapple Group said on Tuesday it would buy Bai Brands, a maker of antioxidant beverages, for $1.7 billion in cash, in the latest example of a soft-drinks maker investing in products that are perceived to be healthier.

The purchase price includes a tax benefit of about $400 million on a net present value basis, said Dr Pepper Snapple, which already has a roughly 3% stake in Bai.

Bai, which means “pure” in Mandarin Chinese, sweetens its drinks with plant-based ingredients and infuses them with antioxidants from coffee fruit and white tea.

Their drinks have no artificial sweeteners and only 5 calories and 1 gram of sugar per serving.

The deal comes as several cities in the United States, including Chicago and San Francisco voted for a new tax on sugary beverages to address health issues linked to sugar consumption.

Dr Pepper Snapple DPS 0.87% bought a minority stake in Bai last year for $15 million and is one of the company’s “Allied Brands,” which are healthy-drinks companies that it distributes through its network.

Princeton, New Jersey-based Bai is expected to generate about $425 million in net sales in 2017, said Dr Pepper Snapple, which also makes the 7UP and Schweppes soft drinks.

The company is expected to add $132 million to Dr Pepper Snapple’s sales in 2017, but reduce its earnings by about 3 cents per share due to higher marketing costs and increased interest expenses related to financing the deal.

The deal is expected to close in the first quarter of 2017 and add to the company’s reported earnings in 2018, Dr Pepper Snapple said.

Reuters reported in October that Dr Pepper Snapple was in talks to acquire Bai Brands.

Credit Suisse Securities (USA) is Dr Pepper Snapple’s exclusive financial adviser and Morgan, Lewis & Bockius its legal adviser.

J.P. Morgan Securities was Bai’s exclusive financial adviser and Skadden, Arps, Slate, Meagher & Flom gave legal counsel.

Source : Dr Pepper Snapple to Buy Antioxidant Drink Maker Bai Brands for $1.7B