Coca-Cola Pays $2.15 Billion for 16.7% Stake in Monster Beverage

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Coca-Cola pays $2.15 billion in exchange for a 16.7 percent stake in Monster Beverage Crop on Thursday.
Coca-Cola, the world’s biggest soda maker, takes a giant stride forward in benefiting more from the fast-growing energy drinks market in recent years.

The Atlanta-based company announced Thursday afternoon that it is making a cash payment of $2.15 billion in exchange for a 16.7 percent stake in energy-drink maker Monster Beverage Crop.

In the $2.15bn deal, Coca-Cola will place two directors on Monster’s board as part of the deal.And Coke will also transfer ownership of its worldwide energy business including brands like Full Throttle and Burn,to Monster. In exchange, Monster will transfer its non-energy business, which include Peace Tea and Hansen’s Natural Sodas, to Coca-Cola.

For Coke, the long-term partnership represents opportunity to increase its footprint in energy drinks, as the company is trying to reposition itself as Americans consume less soda.

“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.” Muhtar Kent,chairman at Coca-Cola said in a statement.
 
“Investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category,” Mr.Kent added.
Chief executive officer of Monster,Rodney Sacks said it would be a win-win trategy.
In turn, the transaction gives Monster access to Coca-Cola’s global distribution system, as the Corona-based company would be able to enter markets where it doesn’t have a presence, like China and Russia, and increase its foot print where the company thinks it can gain share, like Brazil.

“We believe it will be a win-win strategy,” Rodney Sacks, Chief executive officer of Monster,said on a conference call with media,

After the announcement, Coca-Cola shares rose 1.2 percent in after-hours trading, while Monster’s stock shot up 20 percent to $85.77.

Atfer the announcement, Monster’s stock shot up 20 percent in after-hours trading.

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