Monster Beverage share price soars as Coca-Cola buys 16.7pc stake in the company
Coca-Cola is set to pay a colossal ten-figure sum for a 16.7 per cent stake in Monster Beverage Corporation, the makers of Monster Energy drinks.
The American fizzy drinks giant will pay Monster Beverage $2.15bn (£1.32bn) for the 16.7 per cent ownership in a bid to expand within the growing global energy drink market.
The agreement is seen to be mutually beneficial for both parties, with Coke transferring ownership of its worldwide energy business – which includes Relentless energy drink – to Monster, while Monster's non-energy businesses will go the other way.
Monster's shares soared 22 per cent in after-hours trading yesterday, while Coca-Cola shares rose 1.2 per cent.
The deal will offer Coke the chance to increase its power within a global energy drinks market worth $27bn while Monster will gain access to Coke's worldwide bottling system.
Muhtar Kent, chief executive of the Coca-Cola company, said:
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.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.
This deal will not come as a surprise. On the back of its acquisition of Innocent Drinks and more recently its partnership with Green Mountain Coffee, Coca-Cola has recognised the need to diversify its business and offer a broad portfolio of drinks to meet changing consumer drinking habits.The investment into Monster Beverage Corp ticks a lot of boxes and the market’s reaction to it has been overwhelmingly positive.