Reed’s Soda to Buy Out Jones

1. Reed's to buy Jones in deal worth about $9.7M
2. Offer of $0.37 cents per Jones share, at 56 % discount

Struggling soft drink maker Jones Soda Co (NASDAQ: JSDA) signed a letter of intent to be acquired by Reed's Inc (NASDAQ: REED) in a cash-and-stock deal worth about $9.7 million, the companies said on Tuesday.

The $0.37 offer from Reed's, which makes natural sodas and other non-alcoholic drinks, values Jones at that price based on their own $1.58 close on Monday. That is at a discount of 56 % over Jones' Monday close.

Seattle-based Jones, once a hot investor pick famed for its mashed-potato flavored drinks, has hit some hard times lately watching its stock price come crashing down off $20/share price in March of 2007. It does not help that the ever competitive soft-drinks environment is dominated by large players like Coca Cola Co (KO), PepsiCo Inc (PEP) and Dr Pepper Snapple Group Inc (DPS)

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.

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.

JSDA will inevitably open much lower today, as it is off 26% in the pre-market.