US-based energy drinks maker Monster Beverage has entered into an agreement to acquire flavour supplier American Fruits & Flavors (AFF) for $690m.
With the acquisition, the company will bring its primary flavor supplier in-house as well as acquire the intellectual property of some important flavours. It will help Monster boost its flavor development and expand its footprint.
Upon closure of the transaction, Monster would acquire around $87m of adjusted operating income for 12 months ended 31 December 2015.
The acquisition, which is subject to customary closing conditions, is slated to be completed in the first quarter of this year.
AFF founder and president Fred Farago said: "It is important to acknowledge this transaction represents much more than the acquisition of AFF.
"We view today's announcement as the integration of two companies that have enjoyed a tremendously symbiotic relationship over many years. We look forward to joining the highly respected and experienced Monster team to help the company further enhance its position as a global leader in the industry."
The deal provides Monster ownership to intellectual property, which was created in collaboration with AFF, for its flagship 'Monster Energy' energy drinks along with several other flavours in Monster's beverage portfolio.
Monster chairman and CEO Rodney C. Sacks said: "It is with great pleasure that we announce the acquisition of AFF as it marks a tremendous step in the continuing evolution of Monster.
"Not only have we secured the intellectual property of our flagship green energy drink and many of our other key flavors, but we are also partnering with an organization I have personally worked with and known for over 20 years.
"This transaction provides Monster a unique opportunity to leverage new flavor technologies and differentiate ourselves from our largest competitors who do not have these capabilities."
Monster vice chairman and president Hilton H. Schlosberg said: "The transaction is strategic to Monster and presents a unique opportunity for us to take ownership of our most important flavors. It is also beneficial from a growth perspective and enhances earnings per share.
"We have taken an important step by integrating our existing and new flavor development and flavor production under the umbrella of our ownership and are confident AFF will act as a catalyst for further success."
The companies have been collaborating since mid 1990s to develop new products and taste profiles.
