Coke acquires $2bn Monster stake to transform brand into ‘pure play’ global energy drink

Coca-Cola is to purchase a stake in energy drink business Monster for $2.15bn (£1.28bn) in a bid to turn the brand into a “leading energy player” worldwide and bolster its dominance of the beverage market.

Coke can purchase up to 25 per cent of Monster over the next four years.

The drinks maker plans to use the proposed 16.7 per cent share in Monster to turn it into its “exclusive energy play” worldwide. Coke would transfer ownership of its global energy portfolio including brands Burn and Relentless to Monster, while Monster would shift over its non-energy business, which includes brands such as Hubert’s Lemonade and Hansen’s Juice.

These agreements would see Coke distribute Monster globally, which usually includes marketing and media responsibilities. In a statement Coke said it would “optimally align” with Monster’s brand marketing, production and distribution to grow the brand internationally.

The move unites the biggest soft drinks maker in the world with the largest energy drink brand in America.

Muhtar Kent, Coca-Cola chairman and chief executive, says the business is continually looking for “innovative approaches to partnerships” to ensure its dominance of the beverage category. It follows Coke taking a 10 per cent equity stake in Keurig Green Mountain earlier this year, a tie-up formed to create a home beverage machine to rival Sodastream.

Coke is looking for new ways to grow sales, which fell for the third year straight in 2013, forcing it to revise its forecast for 2014. Most recently, revenue slipped 1 per cent in its latest quarter despite increased marketing around the World Cup and its global Share a Coke campaign.

Kent adds: “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.”

Monster stipulates that Coke can increase its stake to 25 per cent through shares purchased on the open market or through negotiations with the company. However, Coke is prohibited from growing its stake beyond 25 per cent for four years without Monster’s approval. It bears similarities to Coke’s eventual takeover of Innocent Drinks in 2013, which began in 2009 when it acquired an 18 per cent stake.


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Tom Fishburne

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