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PepsiCo Invests $550M Into Celsius Brand, Same Company at the Center of Russell Simmons’ Lawsuit Against Ex-Wife Kimora Lee Simmons

As a major beverage company makes over a half-billion-dollar investment into an energy drink company, one of hip-hop’s top business minds is continuing to press a lawsuit to get back his stake in its brand.

New York, NY – Sept. 11: Kimora Lee Simmons and Russell Simmons attend Starbucks for Z Spoke by Zac Posen during Mercedes-Benz Fashion Week Spring 2011 in the The Theater at Lincoln Center on Sept. 11, 2010 in New York City. (Photo by Donald Bowers/Getty Images for Starbucks)

Def Jam co-founder Russell Simmons is aiming to reclaim his shares in Celsius Holdings, a company that he invested in along with his ex-wife Kimora Lee Simmons and her husband Tim Leissner. The urgency of the year-long court battle is bound to heat up, especially after PepsiCo solidified its $550 million investment into the company on Monday, Aug. 1, Forbes reports.

The Distribution Deal

According to a news release about the deal, Celsius will be entering into “announced a definitive agreement forging a long-term strategic distribution arrangement.” 

“The distribution agreement initially transitions Celsius’ current U.S. distribution to PepsiCo’s best-in-class capabilities,” the release further informs. “As part of the transaction, PepsiCo will also make an investment in Celsius in support of its growth agenda and will nominate a director to serve on Celsius’ Board of Directors.”

Kirk Tanner, the CEO of PepsiCo Beverages North America, stated at the time of the deal, “We are extremely pleased to partner with Celsius and excited about the opportunity for our two organizations to drive growth and innovation in the energy beverage category.” 

“The Celsius brand’s growing momentum coupled with the strength of PepsiCo’s portfolio and go-to-market capabilities create a combination we believe will be very compelling and valuable to retailers and consumers,” Tanner wrote in a prepared statement. “We are looking forward to seeing the impact these two outstanding organizations can make together to more fully capture energy occasions.”

John Fieldly, Celsius president, chairman and CEO, commented, “We believe the opportunity to partner with a global best-in-class distributor provides Celsius with significant near-term additional shelf space in both existing retailers as well as new expansion within the independent retailers that represent a significant portion of the U.S. convenience and gas channel where approximately 70% of energy drinks are sold.”

The partnership, which gives Pepsi a minority stake of about 8.5 percent, is positioned to further turn the heat up for Celsius in the market. Before the two companies came together, the energy company had already made significant gains domestically. In the first quarter, the brand’s domestic revenue increased by 217 percent to $123.5 million.

Simmons, whose estimated net worth is $340 million, believes he should also be able to participate in the financial prosperity befalling a company he and his blended family benefited from in the early days.

Simmons Dilemma

Simmons is currently suing his ex-wife, Lee Simmons and Leissner, hoping his lawyers can assist him in retrieving his shares in Celsius back from the couple.

The Phat Farm creator, who placed Lee Simmons in the position to launch her Baby Phat line, alleges the couple transferred his shares to themselves so that they could use his shares as collateral to pay a bond connected to Leissner’s international criminal charges. 

Though Leissner has previously pleaded guilty to criminal conspiracy to violate the Foreign Corrupt Practices Act and conspiracy to commit money laundering in November 2018 for his role in a scheme with the 1Malaysia Development Berhad (1MDB) fund, that cost Goldman Sachs more than $3 billion. As a result, he agreed to forfeit $43.7 million for his role in the scandal. Still, he needed additional collateral to undergird his bond.  

Simmons claims the couple knowingly swindled him out of these now very valuable shares, writing in his lawsuit the two “knew full well that Leissner would need tens of millions of dollars to avoid jail time, stay out on bail, and forfeit monies for victim compensation.” 

The total of his investment is valued at $44 million.

On May 5, 2021, he also sent a letter to his ex-wife Kimora Lee asking her to do the right thing. 

“I am shocked and saddened to see how your side has behaved in response to my repeated attempts to get an agreement from you to rightfully and legally reaffirm my 50% of the Celsius shares … which have been locked up with the government after being used for your husband’s bail money.”

Kimora Lee Simmons Speaks

In response to the lawsuit and the claims from her ex-husband and children’s father, Kimora’s team issued a statement: “Kimora and her children are shocked by the extortive harassment coming from her ex-husband, Russell Simmons, who has decided to sue her for shares and dividends of Celsius stock in which Kimora and Tim Leissner invested millions of dollars. This is an ill-advised attempt by Russell to use the legal system to access funds he is in no way entitled to, and which his own legal team confirms Russell did not pay for.” 

The statement continued, “Russell’s continued aggressive behavior not only blatantly distorts the facts but is simply a desperate PR ploy ignoring the years of mental and emotional anguish, gas lighting, and ongoing harassment he has inflicted on Kimora.”

The response contends that “Russell will be held accountable for his serial abuse, and we will confront his baseless claims that he is warranted Celsius stock dividends despite his self-admitted zero contribution. This extortion attempt is especially egregious given that Russell remains contractually in debt to Kimora for millions of dollars in unpaid business loans. Our team is actively working to put a firm end to his harassment, which continues despite Russell having fled the country – he will face his own reckoning in the US court.” 

A judge has yet to decide any potential damages Simmons is owed from Lee Simmons and Leissner. The Godfather of Rap believes he should be awarded restitution for interest and equal value for the wrongfully obtained shares.

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