{"id":31019,"date":"2023-07-03T20:36:29","date_gmt":"2023-07-04T00:36:29","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/monster-agrees-to-acquire-rival-bang-energy-out-of-bankruptcy-for-362-million\/"},"modified":"2023-07-03T20:36:30","modified_gmt":"2023-07-04T00:36:30","slug":"monster-agrees-to-acquire-rival-bang-energy-out-of-bankruptcy-for-362-million","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=31019","title":{"rendered":"Monster agrees to acquire rival Bang Energy out of bankruptcy for $362 million"},"content":{"rendered":"
\n

Monster Beverage Corp. has agreed to acquire out of bankruptcy its smaller rival Bang Energy after the drinks giant played a role in that company\u2019s demise.<\/p>\n

In a filing last week with the bankruptcy court, Monster
\n MNST,
\n -0.85%<\/bg-quote>
\n said it would pay $362 million for Bang\u2019s assets, which include its energy drinks and a facility in Phoenix, AZ. <\/p>\n

\n

Bang Energy, which is owned by Florida-based Vital Pharmaceuticals, filed for bankruptcy last October after it was sued by Monster for false advertising and other alleged misconduct with a California jury awarding Monster $293 million. <\/p>\n

Monster brought the suit in 2018 on the grounds that Bang Energy was making misleading claims about the physical and mental health benefits of its performance drinks. In April, it was ordered to stop marketing drinks as containing \u201cSuper Creatine,\u201d as Reuters reported. <\/p>\n

Monster had argued that Bang Energy\u2019s drinks do not contain Creatine, which is a substance used in workout supplements, and that \u201cSuper Creatine\u201d offered zero health benefits. Bang Energy had claimed its \u201cmiracle drink\u201d could \u201creverse mental retardation\u201d and help cure neurological disorders.\u00a0<\/p>\n

The deal announced Monday is subject to the approval of the bankruptcy court. <\/p>\n

\u201cWhile Monster is hopeful that the transaction will be completed, there is no guarantee that it will receive Bankruptcy Court approval,\u201d the company said Monday.<\/p>\n

That\u2019s because the deal is pending a review by the Federal Trade Commission, which sent a second request to Bang Energy and Monster on June 22 seeking more information about the planned acquisition. <\/p>\n

Bang Energy has been in business since 1993, developing performance beverages, supplements and workout products, including Meltdown, Quash, Vooz and Redline.<\/p>\n

But the company became mired in lawsuits, including one filed by PepsiCo Inc.
\n PEP,
\n +0.21%<\/bg-quote>,<\/span>
\n over a distribution deal that went wrong. In bankruptcy documents, the company included a $115 million settlement with PepsiCo among large unsecured debts. <\/p>\n

Its legal challenges have also continued, according to the Wall Street Journal. In March, Bang Energy sued its ousted chief executive Jack Owoc, for allegedly refusing to cede control of the company\u2019s social-media accounts on Twitter, Instagram and TikTok, the paper reported. <\/p>\n

If the deal materializes \u2014 and there are many risks that it may not go through besides regulatory ones \u2014 it would be slightly accretive to per-share earnings by about 1% to 2%, according to JP Morgan analysts.<\/p>\n

That\u2019s assuming margin improvement at Vital Pharmaceuticals to about 15% of EBIT (earnings before interest and taxes) and cost synergies. <\/p>\n

\u201cThis would be our best estimate, as the structure of this transaction remains fairly uncertain and given the ongoing steep downward trajectory of the Bang brand and MNST management ultimate plan for the brand and assets,\u201d they wrote in a Friday note to clients.<\/p>\n

\u201cAn acquisition of VPX assets would also come with a large, state-of-the-art manufacturing facility in Arizona, which could be used to produce some of MNST\u2019s products.\u201d<\/p>\n

Among the outstanding questions are whether Monster would try to stem declines in the sales of Bang Energy drinks or discontinue them, and how it would handle distribution, either by sticking with its own main distribution partner, Coca-Cola Co.
\n KO,
\n +0.60%<\/bg-quote>,<\/span>
\n or using an independent distributor, said the note.<\/p>\n

Bang Energy has been on a steep downward track with sales through June 17 down about 54% from the year-earlier period, based on NielsenIQ estimates. <\/p>\n

Monster has struggled too in the current inflationary environment. Fourth-quarter earnings fell short of estimates and the once-highflying company announced price increases and a stock split.<\/p>\n

The stock was down 0.8% Monday and has gained 12% in the year to date, underperforming the S&P 500
\n SPX,
\n +0.12%<\/bg-quote>,<\/span>
\n which has gained 16%. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Monster Beverage Corp. has agreed to acquire out of bankruptcy its smaller rival Bang Energy after the drinks giant played a role in that company\u2019s demise. In a filing last week with the bankruptcy court, Monster MNST, -0.85% said it would pay $362 million for Bang\u2019s assets, which include its energy drinks and a facility […]<\/p>\n","protected":false},"author":1,"featured_media":31020,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-31019","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nMonster agrees to acquire rival Bang Energy out of bankruptcy for $362 million | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Monster Beverage Corp. has agreed to acquire out of bankruptcy its smaller rival Bang Energy after the drinks giant played a role in that company\u2019s\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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