Coca-Cola has announced it will pay USD 2.15 billion for a 16.7 per cent stake in Monster Beverage, cementing a distribution-based link between the two that had added significantly to Coke's profits.
The deal would lock in for the soft drink giant a share of the energy drink market, where its own brands have lagged far behind Monster Energy and rival Red Bull.
Coke will transfer ownership of its energy drink unit -- brands including NOS, Full Throttle and Burn -- to Monster, and take over Monster's non-energy brands like Hansen's Natural Sodas, Peace Tea and Hubert's Lemonade.
Meanwhile, Coke will expand its distribution of Monster drinks under long-term deals, and put two directors on the Monster board.
"The Coca-Cola Company will become Monster's preferred distribution partner globally and Monster will become The Coca-Cola Company's exclusive energy play," the two announced.
The deal comes four months after Coke denied rumours it was in talks to buy Monster Beverage. Critics said a close tie-up was necessary to prevent a rival like Pepsi from buying up a significant contributor to Coke's bottom line.
"Our equity investment in Monster is a capital-efficient way to bolster our participation in the fast-growing and attractive global energy drinks category. This long-term partnership aligns us with a leading energy player globally," said Muhtar Ken, Coke chairman and chief executive.
Coca-Cola pays $2.2 bln for major stake in Monster Beverage
(Reuters) Coca-Cola Co said Thursday it is making a cash payment of $2.15 billion for a 16.7 percent stake in Monster Beverage Corp as the world's largest soda maker seeks to expand into faster-growing categories such as energy drinks.
Under the agreement, Coke will have two directors on Monster's board. Coke will transfer ownership of its worldwide energy business including brands like Full Throttle and Burn, to Monster. Monster will transfer its non-energy business, which includes Hansen's Natural Sodas and Peace Tea, to Coke. Coke will become Monster's preferred distribution partner globally, while Monster brands will be the only energy drinks distributed by Coke.
For Coke, the transaction represents an opportunity to increase its footprint in energy drinks, a $27 billion market globally, according to Euromonitor International. It comes at a time when people are drinking less soda in developed markets. Coke said last month that its quarterly revenue in North America, its biggest market, was flat, partly driven by a decline in diet Coke sales.
In turn, Monster will gain access to