Here’s Why Coca-Cola Made a Monster Investment

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Aug. 15 (Bloomberg) -- Coca-Cola agreed to swap some brands and buy a 17 percent stake in Monster Beverage for about $2.15 billion, increasing its bet on the burgeoning energy-drink market. Bloomberg’s Duane Sanford reports on “In The Loop.” (Source: Bloomberg)

Business with a 17% stake in monster beverage, tightening the bond between the two companies that share marketing, production, and distribution.

For more on the deal, i am joined by bloomberg news' doing standard -- doing stanford.

What is co-coping to gain?

-- coca-cola hoping to gain?

The big twist is a cola is buying a percentage versus the whole thing.

Right now, soft drinks in the united states have been in decline.

Soft drinks as a category have been down for nine years.

Energy drinks are sort of the new soft drinks.

It is a category that has been growing.

One of the big things coco hopes to gain here is the international distribution of monster.

Most of the business, about 80%, by some estimates, are here in the u.s., so there is a lot of room to grow, these companies think, overseas.

Why do they want to do that -- take a stake, rather than by the home -- the whole company?

As muhtar kent told me yesterday, this is a pattern for coke.

They are looking at fast-moving categories, or innovative categories like the new cold at home drink machines.

The idea is to buy a stake, if incubate it.

Perhaps there is a lot of less risk there.

They could perhaps better use capital that way and take a more methodical, intelligent approach to acquisitions, rather than they did -- what they did several years ago to pay 4.1 billion dollars for vitamin water, and over the years it has been good for them, but perhaps if they had gotten in earlier, they would not have had to pay as much as they could've gotten more benefit over time.

Just before we go, they have an option to buy more of the company.

That is right.

They could buy up to 25%. there is a standstill that prevents them from buying more.

The board of directors for monster can approve a larger stake.

The board at coca-cola did not rule out buying the whole thing later.

Right now it gives them a little

This text has been automatically generated. It may not be 100% accurate.


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