Coke buys 16.7% stake in Monster Beverage, Monster shares soar

Coca-Cola Co will buy a 16.7 percent stake in Monster Beverage in a deal that includes the companies swapping ownership of some products.

Coke will make a net cash payment of $2.15 billion to Monster, whose shares spiked as much as 36 percent in after-hours trading. Coke shares rose 1.3 percent.

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“They’re both winners in this one. Coke certainly needs growth and its own energy brands … have really been nonstarters around the world,” said Bill Chappell, a managing director at SunTrust Robinson Humphrey, in a CNBC interview.

Monster “has been gaining share very quickly and hitting the ground running. So it’s a nice shot in the arm to Coke and its distributors.”

Read More Is Monster a fix for Coca-Cola’s Diet Coke withdrawal?

Under terms of the deal, Coke will transfer its energy drink businesses, including NOS and Burn, to Monster. In turn, Monster will transfer its non-energy businesses to Coke, including Hansen’s Natural Sodas.

Coke will get two seats on Monster’s board.

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“Our equity investment in Monster is a capital efficient way to bolster our participation in the fast-growing and attractive global energy drinks category,” Coke CEO Muhtar Kent said in a statement.

The deal is expected to close late this year or early next.

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