(NEW YORK) – On Thursday, Coca-Cola Company, the world’s largest soda manufacturer, bought major stake in Monster Beverage Corp. as the company feels interested in expanding the cola business to energy drinks and alternate beverages.
Moreover, Coca-Cola made a cash payment worth USD 2.15 billion to buy 16.7 % stake of Monster Beverage Corp. The expected transaction will be made during late 2014 and early 2015.
According to the sources, the deal gives an opportunity to increase Coke’s footprint in energy drinks which is a global market of about USD 27 billion. In Return, Monster will have an access to Coca-Cola’s global distribution network. Rodney Sacks, chief executive officer of Monster, told media, “We believe it will be a win-win strategy”. The deal shall enable Monster to expand its market with China, Russia and do more business in Brazil.
“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 CEO, 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.”
By the agreement, Coca-Cola’s worldwide energy businesses, like Full Throttle and Burn, and Monster Corporation’s non-energy businesses, including Hansen’s Natural Sodas and Peace Tea, will transfer their ownership, however, the Monster brand products will get distributed by Coke. In addition to this, Monster’s board will have two Coke directors.
Meanwhile, Monster Corp. is currently facing some lawsuits over its suspected advertising practices. Anyhow, some reports say that Coca-Cola previously showed interest in buying the Monster Corp. two years back in 2011.