Coca-Cola To Buy 17% Stake In Monster Beverage For $2.15 Bln

(RTTNews) - Coca-Cola Co. (KO) Thursday said it has agreed to buy a 16.7 percent stake in Monster Beverage Corp. (MNST) for $2.15 billion, as the beverage giant aims to spur growth in the slowing soda market. Shares of Monster surged 20 percent on the news.

Under the partnership deal, Coca-Cola will transfer its ownership of energy business, including brands like NOS, Full Throttle, Burn, Mother, Play and Power Play, and Relentless to Monster. Meanwhile, Monster will transfer its non-energy business, including Hansen's Natural Sodas, Peace Tea, Hubert's Lemonade and Hansen's Juice Products, to Coca-Cola.

The investment is in line with Coca Cola's strategy to invest in new brands and diversify its product offerings, as the world's largest beverage company faces threat from slowdown in worldwide soda sales as consumers continue to shift to healthier drinks.

Chief Executive Muhtar Kent observed, "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."

Coca-Cola also said it will have two directors on Monster Beverage's Board. The transaction is expected to close later this year or early 2015.

Further, Coke will become Monster's preferred distribution partner globally and Monster will become Coca Cola's exclusive energy play.

Early this year, Coca Cola had acquired a 10 percent stake Keurig Green Mountain Inc. (GMCR) for $1.25 billion and also agreed to a 10-year deal for production and sale of Coca Cola branded single-serve, pod-based cold beverage, which is expected to be launched next year.

MNST closed Thursday's trading at $71.65, up $0.50 or 0.70%, on the Nasdaq. The stock, further gained $15.00 or 20.94%, in after-hours trade.

KO closed Thursday's regular trade at $40.18, up $0.24 or 0.60%, on the NYSE. The stock gained $0.51 or 1.27% in after-hours trade.