NEW YORK (AFP) - Coca-Cola announced Thursday it will pay US$2.15 billion (S$2.68 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 rumors 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.