The Coca-Cola Company (NYSE:KO) announced after market close today that it will purchase a 16.7% stake in Monster Beverage Corp (NASDAQ:MNST) and will also include the transfer the ownership of products to one another. The 16.7% stake will involve a net cash payment to Monster of roughly $2.15 billion.
Product transfers and CEO comments
Coke will transfer its energy drinks NOS and Burn over to the Monster Beverage Corp (NASDAQ:MNST) portfolio while Monster will focus solely on energy drinks and transfer its non-energy drink business to Coke including its popular line of Hansen’s Natural Sodas.
In addition, Coca-Cola will receive two seats on Monster’s board in the coming weeks.
“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,” said Muhtar Kent, Chairman and Chief Executive Officer 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 continued, “We are excited to evolve our long-time partnership. Monster Beverage Corp (NASDAQ:MNST) has been an important part of our global system since 2008, so we have experienced first-hand Monster Beverage Corp (NASDAQ:MNST)’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 Beverage’s massive after-hour gains
“The transaction announced today represents a unique opportunity for Monster and its shareholders,” said Rodney C. Sacks, Chairman and Chief Executive Officer of Monster. “We gain enhanced access to The Coca-Cola Company’s distribution system, the most powerful and extensive system in the world.
Monster Beverage Corp (NASDAQ:MNST) as of this writing (4:58PM EDT) is trading at $87.28 up nearly 22% after initially soaring to a 36% gain in after-hours trading after the deal was announced. The Coca-Cola company is up a modest $0.50 or 1.25% in after-hours trading.