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Coca-Cola Buys 16.7 Percent Stake in Monster Beverage

The energy drinks sector is as hot as ever. For proof, look no further than the new deal that has just been brokered between Coca-Cola Company and Monst...

Frazer Jones
|Aug 15|magazine8 min read

The energy drinks sector is as hot as ever. For proof, look no further than the new deal that has just been brokered between Coca-Cola Company and Monster Beverage Corporation. Today the two beverage companies announced a long term partnership, with Coca-Cola paying $2.15 billion cash in order to acquire a 16.7% minority in Monster Beverage and become the energy drink’s primary distributor.

The deal involves quite a significant shake up the current structure of both Coca-Cola and Monster Beverage – Coca-Cola will be transferring its energy drink brands, including NOS and Full Throttle, over to Monster Beverage. Meanwhile, Monster Beverage will transfer all of its non-energy related titles, including Hansen’s Natural Sodas and Peace Tea, over to Coca-Cola. This effectively transforms Monster Beverage into a laser-focused pure play energy drink company while putting a broader range of products under the Coca-Cola Company’s portfolio umbrella.

The deal also puts two representatives from the Coca-Cola Company to Monster Beverage's Board of Directors, giving the company some say in Monster’s business decisions from now on. In a joint press release issued to announce the partnership, Coca-Cola’s CEO discussed the deal and Coke’s commitment to staying at the forefront of consumer trends:

“Our equity investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category,” said Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company.  “This long-term partnership aligns us with a leading energy player globally, brings financial benefit to our Company and our bottling partners, and supports broader commercial strategies with our customers to bring total beverage growth opportunities that will also benefit our core business.”

 

Meanwhile, Monster Beverage CEO Rodney Sacks discussed the benefits that this investment from Coca-Cola will provide:

“The transaction announced today represents a unique opportunity for Monster and its shareholders,” said Rodney C. Sacks, Chairman and Chief Executive Officer of Monster.  “We gain enhanced access to The Coca-Cola Company’s distribution system, the most powerful and extensive system in the world.  At the same time, we become The Coca-Cola Company’s exclusive energy play, with a robust portfolio led by our Monster Energy line and The Coca-Cola Company’s energy brands.  Our business will be bolstered by The Coca-Cola Company energy brands we will acquire, providing us with complementary energy product offerings in many geographies, as well as access to new channels, including vending and specialty accounts,” Sacks said.

 

The partnership deal is expected to close in full by late 2014 or early 2015.

 

[SOURCE: http://www.coca-colacompany.com/press-center/press-releases/the-coca-cola-company-and-monster-beverage-corporation-enter-into-long-term-strategic-partnership via http://www.buzzfeed.com/sapna/coca-cola-buys-17-of-monster-beverage-underscoring-meteoric#eztepu]