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Monster Beverage Said to Explore Deal With Constellation

According to people familiar with the matter, Monster Beverage Corp., a producer of energy drinks, is considering a deal with Corona brewer Constellation Brands Inc.

According to the people, Monster Beverage, which has Coca-Cola Co. as a significant shareholder, has discussed a potential agreement with advisers. They asked not to be identified because the negotiations are confidential.

Monster Beverage, which has a market value of $48 billion, and Constellation Brands, which has a market value of $44 billion, may not be able to come to an agreement. The exact structure of a potential tie-up could not be determined right away, and it’s unclear whether the talks will result in a full merger or asset deal.

According to the people, any deal with Constellation would require the Sands family’s approval, as the company has grown into a global beverages player.

A spokeswoman for Constellation Brands declined to comment, while a representative for Monster Beverage could not be reached for comment immediately.

At 11:25 a.m. in New York, Constellation fell 0.1% at $235.07, while Monster rose 0.9% to $90.11. Both stocks have underperformed the S&P 500 index’s 25% gain in 2021.

Coca-Cola according to Kenneth Shea, senior analyst for beverage and tobacco companies, stated that Monster’s relationship with Coca-Cola may pose a sticking point.

I see such a transaction, if effected, as jeopardizing Monster’s exclusive distribution agreement with Coca-Cola, which could derail its international growth ambitions, Shea said. 

I see little synergy between these two companies, as regulators would not welcome drinks that combine caffeine and alcohol, Shea added. The products produced would have to leverage their respective brands but be mindful of the limitations with product formulations.

Coca-Cola’s representative declined to comment.

Drink Deals

In 1945, Constellation Brands, based in Victor, New York, began as a wine producer. Corona Extra and Modelo Especial, as well as Casa Noble Tequila, Svedka Vodka, and High West Whiskey, are now available in the United States.

A partnership between Constellation and Monster might be exciting for the cannabis-infused beverage sector. Monster has been said to be considering CBD or hard seltzer categories, but there are concerns that this could harm the company’s reputation.

Constellation owns nearly 40% of Canopy Growth, a marijuana firm based in Canada. Canopy distributes THC-infused drinks in Canada and plans to do so in the United States if marijuana is legalized federally.

Despite supply-chain issues such as securing aluminum cans in the midst of the pandemic, Monster Beverage reported record third-quarter net sales earlier this month.

If the talks go well, it will be the latest beverage deal since Coca-Cola agreed earlier this month to acquire the remaining stake in sports-drink brand BodyArmor for $5.6 billion in cash.

possible that more alcohol deals are on the way. It was  previously reported that private equity firm Sycamore Partners is considering a $1 billion sale of Stag’s Leap Wine.

Sycamore purchased the brand as part of its $1.2 billion acquisition of Ste. Michelle Wine Estates from Altria Group Inc. in October.

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