It’s not just giant cable conglomerates and big tech companies that have been snatching up any smaller business they can get their mits on, Coca-Cola’s getting in on the action too. Only six months after the beverage king bought out Green Mountain Coffee, the company has announced that it will invest $2.15 billion for a 16.7% stake in Monster Beverage. Coca-Cola will also acquire two seats on Monster’s board of directors. The deal has been negotiated in cash and Monster will also be issuing shares of its common stock to their new partner.
Coca-Cola already owns Full Throttle, Burn and Power Play, and will soon transfer all of their energy drink management over to Monster. Likewise, Monster will be transferring its non-energy drink managment to Coca-Cola. It includes Hansen’s Natural Sodas, Peace Tea and Hubert’s Lemonade. Muhtar Kent, Coca-Cola chairman and CEO, explained in a statement, as reported by Forbes,
“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.”
Monster is excited at gaining access to Coca-Cola’s worldwide distribution system which they view as “the most powerful and extensive system in the world.” According to Forbes, Monster chairman and CEO Rodney Sacks reasoned,
“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 accounts.”
Wall Street has responded strongly to the investment news. Monster shares soared by 30% in after market trading after the deal was announced on August 15. Coca-Cola’s shares rose as well in after market trading, though they only experienced a 1.3% increase in share value. Since the beginning of 2014, Monster’s stock is up 6% while Coca-Cola has experienced a 1.8% decline.