Coca-Cola Co said Thursday it is making a cash payment of $2.15 billion for a 16.7 percent stake in Monster Beverage Corp as the world's largest soda maker seeks to expand into faster-growing categories such as energy drinks.Under the agreement, Coke will have two directors on Monster's board. Coke will transfer ownership of its worldwide energy business including brands like Full Throttle and Burn, to Monster. Monster will transfer its non-energy business, which includes Hansen's Natural Sodas and Peace Tea, to Coke. Coke will become Monster's preferred distribution partner globally, while Monster brands will be the only energy drinks distributed by Coke.For Coke, the transaction represents an opportunity to increase its footprint in energy drinks, a $27 billion market globally, according to Euromonitor International. It comes at a time when people are drinking less soda in developed markets. Coke said last month that its quarterly revenue in North America, its biggest market, was flat, partly driven by a decline in diet Coke sales.In turn, Monster will gain access to Coke's extensive global distribution system. The companies have a distribution agreement in the U.S. and Canada and will amend it to expand into additional territories. On a conference call with media, Rodney Sacks, chief executive officer of Monster, said that the company would also convert distribution agreements it has with Anheuser-Busch InBev in the U.S. to Coke.
Anheuser-Busch InBev SA, formerly Anheuser-Busch InBev SA/NV, is a brewing company. Shares of BUD traded higher by 1.19% or $1.29/share to $109.37. In the past year, the shares have traded as low as $92.76 and as high as $116.65. On average, 1100620 shares of BUD exchange hands on a given day and today's volume is recorded at 521071.
Monster Beverage Corporation is a holding company. Shares of MNST traded higher by 0.7% or $0.5/share to $71.65. In the past year, the shares have traded as low as $51.15 and as high as $75.63. On average, 1387680 shares of MNST exchange hands on a given day and today's volume is recorded at 1978304.
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