stranger to rumours of possible bids for the privately-owned drinks firm Monster by Coca-Cola and Anheuser-Busch.Now Wells Fargo analyst Bonnie Herzog has suggested Coca-Cola is the most obvious option.
In a message regarding the matter, he wrote, “We believe that Coca-Cola is still the most likely buyer of Monster given the distribution arrangement the two companies have."
While Monster faces a number of legal matters, Herzog believes that Coca-Cola is happy to wait until issues are resolved before making a bid for the business.
On the matter of pricing, he stated, “Coca-Cola paid about 20x EBITDA for Glaceau (water), a very high premium, and one that we suspect management would be reluctant to do again, based on public comments the company has made.”
“However, given the challenges of the CSD market in the United States, we believe that there is still a possibility that Coca-Cola would be interested in buying Monster and potentially paying a similar multiple for Monster.”
Herzog added that the “heightened public focus” on sweetened and caffeinated beverages meant he would not be surprised if “some level of additional regulation” is introduced at some point in the future.
“We believe Monster is confident in its position as having a safe product.”
