(Reuters) - Struggling soft drink maker Jones Soda Co (JSDA.O) signed a letter of intent to be acquired by Reed"s Inc (REED.O) in a cash-and-stock deal worth about $9.7 million, the companies said on Tuesday.
The offer from Reed"s, which makes natural sodas and other non-alcoholic drinks, values Jones at about 37 cents a share, based on Reeds" Monday close of $1.58. That is a discount of 56 percent to Jones" Monday close.
Seattle-based Jones, once a hot investor pick famed for its mashed-potato flavored drinks, has seen sales and its share price sink in the cut-throat soft-drinks environment dominated by large players like Coca Cola Co (KO.N), Pepsico Inc (PEP.N) and Dr Pepper Snapple Group Inc (DPS.N).
On Tuesday, the companies said Jones shareholders would receive 4.5 million shares of Reed"s common stock and 10 cents per Jones share in cash.
Reed"s and Jones have until April 5 to negotiate a definitive agreement on an exclusive basis.
Shares of Jones have plunged to 84 cents as of Monday"s close from a level above $20 reached in March 2007, when stock commentator Jim Cramer touted the stock on his "Mad Money" show on business cable channel CNBC.
The company, which has been reviewing strategic alternatives since February 2009, also said its chief executive, Joth Ricci, will be stepping down effective April 2.
"Over the past year we have taken numerous steps to reduce our expenses and reinvigorate our top line in order to return to profitability," Rick Eiswirth, chairman of Jones said in a statement.
"Unfortunately, the challenging economic environment combined with our current capitalization has made it extremely difficult to operate on a standalone basis," he said.
In December, Jones had received a buyout offer at a 55 percent discount from privately held Texas-based Big Red Holdings Corp, which Jones had said it would evaluate.
Jones shares were trading down at 62 cents before the bell, while Reed"s was up slightly at $1.76.
(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Vinu Pilakkott and Aradhana Aravindan)
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