US: Coca-Cola Co quells talk of Monster Beverage Corp buy
Coca-Cola said it is not chasing Monster Beverage Corporation
The Coca-Cola Co has denied that it is in talks to buy energy-drinks producer Monster Beverage Corp.
A report in the Wall Street Journal yesterday (30 April) said that Coca-Cola had explored a deal with the second-largest energy-drinks maker (after Red Bull). The deal would have been the largest in Coca-Cola's history, the report said.
Shares in Monster, which has a distribution deal with Coca-Cola, jumped 28% on talk of the deal but ended the day down after the soft-drinks giant refuted the reports.
“Coca-Cola has a distribution relationship with Monster in many markets, including the US,” Coca-Cola said in a statement. “Therefore, we are always in contact with Monster to maximise the value of our commercial arrangements. At this time, we are not in discussions to acquire the Monster Beverage Corporation.”
When asked by just-drinks if the company had previously discussed a deal with Monster, Coca-Cola said it would not comment beyond the statement.
Coca-Cola has tried to leverage its way into the fast-growing energy drinks market through its own-brand energy drink but failed to make an impact on market leaders Red Bull, Monster and 5-Hour Energy.
A swoop for Monster would immediately give it access to a market that has grown an average 10% in the past five years.
Analysts have said that Coca-Cola would benefit from a Monster buyout. “We think a purchase would be a strategic win for Coca-Cola given the category’s importance and Monster’s market position and international momentum,” said Stifel Nicolaus analyst Mark Swartzberg.
However, Swartzberg said the size of a potential deal could cause problems.
Coca-Cola's largest acquisition was in 2007, when it bought Glaceau and its Vitaminwater brand for US$4.1bn, Swartzberg said.
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