Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
Okay. I admit it. Sometimes journalists are overcome by hyperbole. But when we say that it was a monster of a day for Monster Beverage Corp. (NASDAQ:MNST) and Coca Cola (NYSE:KO), it is the real thing. When the two companies announced that the rumors about Coke purchasing a position in Monster were true, Monster’s share price increased more than 30% to 93.61 and stayed there for the entire day. Coke’s $2.15 billion acquisition of 16.7% of Monster was the catalyst for a 1.74% increase in its own share price to 40.88 within 30 minutes of the closing bell.
John Sicher, Editor and Publisher of Beverage Digest, told the Atlanta Journal & Constitution, Coke’s hometown newspaper, that, “This is a big deal for Coke. Monster, by volume, leads the energy drink business in the U.S. Last year, it had a 37.9% share and out-performed the energy drink category. It is an important and powerful brand.” That role will be enhanced by the transfer of current Coke products NOS, Full Throttle and Power Play into its portfolio.
All of Monster’s non-energy drinks will move under the Coca Cola umbrella. That is a windfall for Monster. “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,” said Monster Chairman and CEO Rodney C. Sacks.
Coca-Cola CEO Muhtar Kent added his perspective that “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. We believe this partnership will create compelling and sustainable value for our system and our shareowners.”
Sacks and Monster Vice Chairman Hilton Schlosberg each own over nine million shares in their company. The infusion of cash from Coca Cola with thrust the two gentleman, neither of whom has ever been listed on any world’s wealthiest lists, into the stratospheric expanse of wealth occupied only by billionaires once the sale is completed. That is expected to happen by early 2015, at the latest. Not to mention the investors of any size who gained 30% on their Monster investment literally overnight.
On another note, someone needs to tell that Red Bull to run. There’s a Monster coming after it.
