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Coca-Cola buys US$2.15b stake in Monster Beverage

Coca-Cola announced on Thursday it will pay US$2.15 billion for a 16.7 per cent stake in Monster Beverage, cementing a distribution-based link between the two that had added significantly to Coke's profits.

NEW YORK: Coca-Cola announced on Thursday it will pay US$2.15 billion (S$2.67 billion) for a 16.7 per cent stake in Monster Beverage, cementing a distribution-based link between the two that had added significantly to Coke's profits.

The deal would lock in for the soft drink giant a share of the energy drink market, where its own brands have lagged far behind Monster Energy and rival Red Bull.

Coke will transfer ownership of its energy drink unit - brands including NOS, Full Throttle and Burn - to Monster, and take over Monster's non-energy brands like Hansen's Natural Sodas, Peace Tea and Hubert's Lemonade.

Meanwhile, Coke will expand its distribution of Monster drinks under long-term deals, and put two directors on the Monster board. "The Coca-Cola Company will become Monster's preferred distribution partner globally and Monster will become The Coca-Cola Company's exclusive energy play," the two announced.

The deal comes four months after Coke denied rumours it was in talks to buy Monster Beverage. Critics said a close tie-up was necessary to prevent a rival like Pepsi from buying up a significant contributor to Coke's bottom line.

"Our equity investment in Monster is a capital-efficient way to bolster our participation in the fast-growing and attractive global energy drinks category. This long-term partnership aligns us with a leading energy player globally," said Muhtar Ken, Coke chairman and chief executive.

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