Coca-Cola enters strategic partnership with Monster Beverage Corp

Coca-Cola and Monster Beverage Corp have entered into a strategic partnership which will see Monster assume control of Coke’s energy brands and Coke assume control of Monster’s non-energy brands. Coca-Cola will also take a 16.7% stake in Monster.  

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.