Coca Cola Company Buys Stake in Monster Beverages for $2.5 Billion

The Coca-Cola Company has agreed to purchase 16.7 percent stake in Monster Beverages, the famous energy and soft drinks manufacturing firm for a deal worth $2.5 billion, the companies announced Friday, Aug 14.

Coca Cola said that it has entered into definitive long term agreements with Monster where the latter will join the former's energy-drink portfolio. The deal is expected to boost growth for both the companies.

Coca Cola will help distribute Monster's energy drink brands while transferring complete ownership of its own energy beverages like  NOS, Full Throttle, Burn, Mother, Play and Power Play, and Relentless to Monster.

Coca Cola plans on financing the deal through an all cash payment. However, according to USA Today, the company could end up increasing its stake amount to 25 percent.

"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 and CEO of Coca-Cola said in statement.

"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," he added.

"The transaction announced today represents a unique opportunity for Monster and its shareholders," Rodney C. Sacks, Chairman and CEO of Monster added in the statement. 

"We gain enhanced access to The Coca-Cola Company's distribution system, the most powerful and extensive system in the world.  At the same time, we become The Coca-Cola Company's exclusive energy play, with a robust portfolio led by our Monster Energy line and The Coca-Cola Company's energy brands.  Our business will be bolstered by The Coca-Cola Company 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," Sacks said.