Monster and Coca-Cola
Monster Beverage Corporation (MNST) entered into a landmark deal with The Coca-Cola Company (KO) in August 2014. Under the deal, Coca-Cola will purchase a 16.7% stake in Monster Beverage for $2.15 billion. Both of the companies are part of several ETFs—like the Consumer Staples Select Sector Fund (XLP), the SPDR MSCI World Quality Mix ETF (QWLD), and the SPDR S&P 500 ETF (SPY).
Terms of the deal
The deal is expected to close in early 2015. Under this deal, Coca-Cola will transfer its energy product portfolio to Monster Beverage. Coca-Cola will have two directors on Monster Beverage’s board. In turn, Monster Beverage will transfer its non-energy drink portfolio to Coca-Cola—including Hansen’s natural sodas, Peace Tea, Hubert’s Lemonade, and Hansen’s juice products.
Monster Beverage’s synergies
Monster Beverage is the second largest energy drink maker. With the transfer of Coca-Cola’s energy portfolio, Monster Beverage will gain more strength in the energy drink market. Now, Monster Beverage will own Coca-Cola’s energy drink brands—like NOS and Full Throttle. It will also own other brands—like Burn and Relentless.
Globally, Coca-Cola will become Monster Beverage’s preferred distribution partner. Monster Beverage already depends on Coca-Cola and other third parties to distribute its products. Access to Coca-Cola’s extensive global distribution network will help Monster Beverages gain more shelf space and expand its international reach.
The deal will also benefit Coca-Cola. Its investment in Monster Beverage will give it access to the rapidly growing energy drink market. Coca-Cola and other soda makers have been struggling because of declining soda volumes in developed markets, like the US, over the past few years. You can read our company overview on Coca-Cola for more information on the beverage giant.