Dive Brief:
- Monster Energy is set to buy rival Bang Energy for up to $362 million, according to a court filing dated June 28. Blast Asset Acquisition, a Monster subsidiary, was the only successful bidder for substantially all of Bang’s assets. Monster had no comment on the filing.
- The document, filed in the U.S. Bankruptcy Court for the Southern District of Florida, said the purchase by Monster is being delayed following a review from the Federal Trade Commission.
- Unless the agency ends the review early and another requirement tied to the merger doesn’t expire or isn’t terminated by June 30, the deal will fall apart. Bang and Monster could agree to an extension, the court filing noted. If the deal collapses, Bang could be forced to liquidate.
Dive Insight:
Monster’s decision to acquire Bang is the culmination of a long, drawn-out saga for the beleaguered energy drink maker.
In the last few years, Bang and its parent Vital Pharmaceuticals have been mired in a legal tussle and bitter breakup with snack and beverage giant PepsiCo, seen the ouster of its controversial and outspoken founder and CEO Jack Owoc and filed for bankruptcy.
The bankruptcy filing in October came after Monster Energy won $293 million in a false advertising and trade secrets case against Bang. Monster was identified in bankruptcy court papers as Bang’s largest unsecured creditor.
During a court hearing on Thursday, Bang lawyer Andrew Sorkin said the company will cease operations, leading to the loss of about 700 jobs, if the Monster deal falls apart, according to Bloomberg. He told the court the FTC needs to make a determination within 24 hours because Monster’s asset purchase agreement terminates if the deal doesn’t clear the agency’s review process by June 30.
“Either there’s a sale to Monster or there will be an immediate liquidation,” Sorkin said.
The FTC previously indicated it will require more information on the sale as part of a review process, according to Bloomberg. The FTC could decide to end its review early, the wire service noted, citing the risk that Bang has to liquidate if the deal collapses.
In April, Stifel analyst Mark Astrachan said Monster was “best-positioned to acquire” Bang, noting that in addition to being its largest creditor, it is a co-rights holder to a 5% perpetual royalty/license for use of the Bang beverage trademark. At the same time, he said Monster was challenging Bang’s ability to transfer the Bang trademark license to an acquirer, which would give Monster “near total control over Bang’s future.”
Little is known about what Monster would do with Bang should it assume control of it as expected. It could decide to shut down the brand, effectively removing a competitor from the marketplace. Most likely, however, it will choose to add a smaller energy drink brand with a widely recognizable name to complement its dominant Monster offering.
In his research note, Astrachan said Bang’s market share was 2.6% of the U.S. energy drink category compared to Monster’s 35.1% share. Monster, which has entered alcohol and water, posted $6.31 billion in sales in 2022. The beverage company’s net sales have increased annually since 2008 when sales totaled $1 billion, according to Statista.
As part of the acquisition, Monster also would likely take control of a Bang-operated 400,000-square-foot manufacturing facility near Phoenix that could produce about 15% of Monster’s U.S. volumes and help it supply a larger portion of the company’s West Coast production needs.
(Update: adds details from court filing, media report)