The Coca-Cola Company, Atlanta, and Monster Beverage Corporation, Corona, Calif., formed a strategic partnership that officials expect will “accelerate growth for both companies in the fast-growing, global energy drink category.”
Officials say the deal strategically aligns both companies for the long-term by combining the strength of The Coca-Cola Company’s worldwide bottling system with Monster’s dedicated focus and expertise as a leading energy player globally.
Terms provide for The Coca-Cola Company to acquire an approximated 16.7% ownership interest in Monster (post issuance) and have two directors on Monster’s board of directors. The Coca-Cola Company expects to account for its investment in Monster under the equity accounting method.
To optimally align product portfolios and enable those portfolios to benefit from each company’s respective brand marketing, production and distribution strengths and optimize the parties’ capital and resource allocation, The Coca-Cola Company will transfer ownership of its worldwide energy business, including NOS, Full Throttle, Burn, Mother, Play and Power Play, and Relentless, to Monster. In turn, Monster will transfer its non-energy business—including Hansen’s Natural Sodas, Peace Tea, Hubert’s Lemonade and Hansen’s Juice Products—to The Coca-Cola Company.
The Coca-Cola Company and Monster will amend their current distribution agreement in the U.S. and Canada by expanding into additional territories and entering into long-term agreements. The Coca-Cola Company will become Monster’s preferred distribution partner globally and Monster will become The Coca-Cola Company’s exclusive energy play. Officials say these agreements will deliver sustainable value to The Coca-Cola Company’s global system and accelerate Monster’s opportunity to grow internationally.
Pursuant to the terms of the transaction agreements, at the closing, The Coca-Cola Company will make a net cash payment of $2.15 billion and transfer its worldwide energy business to Monster. In exchange, Monster will issue to The Coca-Cola Company the shares of Monster common stock, transfer its non-energy business to The Coca-Cola Company, and enter into expanded distribution arrangements. The transaction, which is expected to close late in 2014 or early in 2015, is subject to customary closing conditions, including receipt of regulatory approvals.
“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,” says Muhtar Kent, chairman and CEO of The Coca-Cola Company. “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, 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.”
Kent added, “We are excited to evolve our long-time partnership. Monster has been an important part of our global system since 2008, so we have experienced first-hand Monster’s performance-driven and entrepreneurial culture, proven success in building and extending the Monster brand and their strong product innovation pipeline. We believe this partnership will create compelling and sustainable value for our system and our shareowners.”
“The transaction announced today represents a unique opportunity for Monster and its shareholders,” adds Rodney C. Sacks, Monster’s chairman and CEO. “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.”
He concludes, “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.”
The Coca-Cola Company is the world's largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by Coca-Cola, the company’s portfolio features 17 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, Coca-Cola is leading provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks.
Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The company's subsidiaries market and distribute energy drinks and alternative beverages including Monster Energy® brand energy drinks, Monster Energy Extra Strength Nitrous Technology® brand energy drinks, Java Monster® brand non-carbonated coffee + energy drinks, X-Presso Monster® brand non-carbonated espresso energy drinks, M3® Monster Energy® Super Concentrate energy drinks, Monster Rehab® non-carbonated energy drinks with electrolytes, Muscle Monster® Energy Shakes, Übermonster® energy drinks, and Peace Tea® iced teas, as well as Hansen's® natural sodas, apple juice and juice blends, multi-vitamin juices, Junior Juice® beverages, Blue Sky® beverages, Hubert's® Lemonades and PRE® Probiotic drinks.