Coca-Cola rumored to buy Monster
Speculation circulates that the beverage giant could be on the verge of its largest acquisition ever.
Jack Russo of Raymond James thinks Coke might be planning to buy the energy-drink maker. If that were to be the case, he said, investors should look for Coke to begin selling off some bottling assets to raise money. Still, he noted that if Coke were to consider such a move, it may draw fire from shareholders since the purchase price would amount to a "king's ransom."
Shares of Monster Beverage rose nearly 3% Thursday to close at $65.38, giving it a market value of $11.5 billion. Assuming some premium, the purchase would be the largest in Coca-Cola's history. Given the size of the deal, investors may be skeptical of the possibility.
Still, energy drinks remain one the fastest-growing sectors of the beverage market, and Coke's attempt to enter the market with its own Full Throttle has proven to be a failure.
Benzinga spoke to another analyst on the possibility, but he declined to comment on the record as he was not authorized to speak on the matter.
"Yes, the price Coke would have to pay for Monster would be the biggest hangup," he stated. "Still, Coke wants to be a bigger presence in the energy drink market and they already have a fairly close distribution relationship with Monster. The move would be elevating that to the next level. They could do it, but they would really have to be excited about Monster's growth prospects."
Shares of Coca-Cola closed Thursday up 1.04% to $75.71.
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