Coca-Cola enters strategic partnership with Monster Beverage Corp

The deal “is expected to accelerate growth for both companies in the fast-growing, global energy drink category​”, said the firms in a statement Thursday. “The Coca-Cola Company will become Monster's preferred distribution partner globally and Monster will become The Coca-Cola Company's exclusive energy play.”​

Under the proposed deal - which is expected to close in late 2014 or early 2015 - Coca-Cola will pay Monster $2.15bn in cash and transfer its worldwide energy business to Monster, while Monster will issue shares of Monster common stock to Coca-Cola, transfer its non-energy business to Coca-Cola, and enter into expanded distribution arrangements.

Highlights of the deal:​

• Coca-Cola will acquire an approximately 16.7% ownership interest in Monster (post issuance) and will have two directors on Monster's board of directors.
• Coca-Cola will transfer ownership of its worldwide energy business (NOS, Full Throttle, Burn, Mother, Play and Power Play, & Relentless) to Monster.
• Monster will transfer its non-energy business (Hansen's Natural Sodas, Peace Tea, Hubert's Lemonade and Hansen's Juice Products) to Coca-Cola.
• Coca-Cola and Monster will amend distribution agreements in the U.S. and Canada by expanding into additional territories and entering into long-term agreements.

Coca-Cola will pay Monster $2.15bn in cash​

Coca-Cola, which recently took a sizeable equity stake in Keurig Green Mountain, with whom it is developing the Keurig ‘Cold’ platform, said the deal was a “capital efficient way​” to increase its participation in the energy drinks category.

CEO Muhtar Kent added: "The Coca-Cola Company continues to identify innovative approaches to partnerships that enable us to stay at the forefront of consumer trends in the beverage industry.”​

Deal gives Monster access to Coca-Cola distribution system, ‘the most powerful and extensive system in the world’​

Monster CEO Rodney C. Sacks, added: "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 account.”​

Click HERE​ for reaction from Euromonitor International and Wells Fargo.