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Coca-Cola, Monster Beverage form strategic partnership
August 14th, 2014
ATLANTA and CORONA, Calif. – The Coca-Cola Co. and Monster Beverage Corp. have entered an agreement for a long-term strategic partnership that aims to spur growth for both companies in the global energy drink market.
The beverage companies said late Thursday that the partnership aligns them for the long-term by combining the strength of Coca-Cola's worldwide bottling system with Monster's focus and expertise as a leading energy player globally.
Under the agreement, Coca-Cola is slated to acquire a 16.7% ownership interest in Monster and have two directors on Monster's board.
To align their product portfolios and leverage each company's brand marketing, production and distribution strengths, Coca-Cola 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 Coca-Cola.
Coca-Cola and Monster also plan to amend their current distribution agreement in the United States and Canada by expanding into additional territories and entering into long-term agreements. Coca-Cola will become Monster's preferred distribution partner globally, and Monster will become Coca-Cola's exclusive energy play.
"The Coca-Cola Co. continues to identify innovative approaches to partnerships that enable us to stay at the forefront of consumer trends in the beverage industry," stated Muhtar Kent, chairman and chief executive officer of Coca-Cola. "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 noted that Monster has been a key part of Coca-Cola's global system since 2008. "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," he added.
At the closing of the transaction, Coca-Cola will make a net cash payment of $2.15 billion and transfer its worldwide energy business to Monster. In exchange, Monster will issue to Coca-Cola the shares of Monster common stock, transfer its non-energy business to Coca-Cola, and enter into expanded distribution arrangements.
The deal is expected to close late in 2014 or early in 2015, pending customary closing conditions and regulatory approvals.
"The transaction announced today represents a unique opportunity for Monster and its shareholders," commented Rodney Sacks, chairman and CEO of Monster. "We gain enhanced access to The Coca-Cola Co.'s distribution system, the most powerful and extensive system in the world. At the same time, we become The Coca-Cola Co.'s exclusive energy play, with a robust portfolio led by our Monster Energy line and The Coca-Cola Co.'s energy brands. Our business will be bolstered by The Coca-Cola Co. 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."