Coca-Cola Not Eying Monster Takeover
"Coca-Cola has a distribution relationship with Monster in many markets, including the United States. Therefore, we are always in contact with Monster to maximize the value of our commercial arrangements. At this time, we are not in discussions to acquire the Monster Beverage Corp. We continue to review the best ways to maximize the value of our relationship," Coca-Cola said in a statement yesterday afternoon.
The company's statement was triggered by reports that the beverage giant was looking to add Monster to its fold. The rumors helped push Monster's stock prices up as much as 26 percent early Monday. However, that leap began to fade as speculation died down about a possible acquisition, according to the New York Times, and it ended the day down 53 cents to $65 a share.
A deal would have been one of the biggest deals in Coca-Cola's history, pushing past the company's $12-billion acquisition of its North American bottling operations. The company's biggest brand takeover to date was its $4.2-billion purchase of Energy Brands, the maker of Vitaminwater drinks, the news outlet added.
However, even as rumors swirled, analysts and investors raised concerns that the hefty price of a Monster takeover. Monster's market value as of April 25, the day before rumors of negotiations began percolating, was about $11.2 billion. Factoring in a decent takeover premium meant that the deal could have cost over $13 billion, according to the report.
The news outlet also pointed to Coca-Cola's distribution pact with Monster as another obstacle to any takeover. That pact eliminates some of the cost savings Coca-Cola would use to justify a deal.