Boston, MA 08/18/2014 (wallstreetpr) – According to reports, The Coca-Cola Company (NYSE:KO) has decided to expand into faster-growing food business. For the same cause, KO has acquired 16.7% stake in Monster Beverage Corp (NASDAQ:MNST). The company has to pay a hefty amount of $2.15 billion for this transaction.
What Prompted KO For This Expansion:
The Coca-Cola Company (NYSE:KO) is the largest soda maker of the world, but due to the increased competition in the market; it has started to look in other directions as well. Nowadays energy drinks are liked by most of the people in all around the world; hence, KO plans to enter into this business as well. MNST is a well-known name in the energy drinks category; therefore, KO has entered into an agreement with the company. According to the T&C of the contract, KO will have two directors in MNST board. Apart from it, KO will also transfer the ownership of its energy business brands like Burn and Full Throttle to MNST. At the same time, MNST will transfer ownership of non-energy drink business like Peace Tea and Hansen’s Natural Soda to KO.
After signing the deal, The Coca-Cola Company (NYSE:KO) will become the favorite brand of MNST to sell its products in all over the world while MNST will only sell energy brands of KO. According to a survey done by Euromonitor International, energy drink market has gone up to $27 billion globally. Therefore, it’s a great chance for KO to enter into this segment and explore the market opportunities. Recent market results show that KO has lost significant market share in the soda market over the last few months. It soda business in North America was affected due to change in the trend. People have started liking energy drinks more than soda; therefore, it’s a good chance for the company. At the same time, Monster Beverage Corp (NASDAQ:MNST) will be able to explore the market globally with the help of KO’s network. It’s a win-win situation for both the companies.
