In the Spotlight - A Monster Deal in the Offing for Coca-Cola?
Will Monster get eaten up by The Coca-Cola Company? Speculation is rife again.
Have journalists on the Wall Street Journal business desk been drinking too many energy drinks, or will its story that The Coca-Cola Co is to swoop for Monster bear fruit?
The Coca-Cola Co denied the report, which broke earlier this week, but not before Monster's share price had risen by a whopping 28%. The Wall Street Journal said Coca-Cola was in discussions with Monster over a potential deal, but the drinks giant later said it was not in discussions to acquire the company “at this time”.
The purchase would be the biggest acquisition in TCCC's 126-year history, the WSJ said. Quoted in the FT, analyst Ali Dibadji, of Bernstein Research, said: “It certainly makes sense for Coca-Cola to be involved with energy drinks and interested in Monster. If they are going to play in this space, they need to do it with an established brand.”
Coca-Cola sells its own energy drink, NOS, the FT noted, but the brand has failed to lure people away from the giants of the sector, Monster and Red Bull.
Dibadj suggested that now would be a good time to acquire Monster because it has not yet made a push into Asia or other emerging markets, which Coca-Cola could benefit from.
The firm's interest in Monster is predictable, considering the size of the energy drinks market against an overall decline in the soft drinks market. Monster, which changed its name in January from Hansen Natural Corp, raked in US$1.7bn in revenue last year – a 31% rise, the LA Times said.
Bloomberg quoted analyst Thomas Mullarkey, of Morningstar, saying: “Coca-Cola would be able to grow Monster internationally at a far more rapid pace. If Coca-Cola wants to compete in energy drinks, acquiring is a faster way to achieve it.” Mullarkey had said Monster was worth $73 a share in a buyout, before today.
Bloombergy also noted that Coca-Cola already distributes almost half of Monster’s US volumes, while Anheuser-Busch InBev distributes around the same amount with a few small distributors making up the balance.
If the deal did happen, the wesbite Investor Place suggested it couldn't be worse timing for Coke's rival PepsiCo, which is in the midst of a shake-up led by CEO Indra Nooyi.
Is the takeover story a whole load of fizz and wasted energy? Watch this space.
The second part of this month's management briefing shines a light on the logistics landscape in the Americas....
This month, Ray Rowlands, from independent beverage research company Drinksinfo, takes a closer look at the massive and constantly-expanding Nigerian packaged water market....
Let's face it, when it comes to stunts there really was only one game in town this week....
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