Coke Moves Ahead With Monster Deal

Coca-Cola Co. is preparing to assume a minority stake in Monster Beverage Corp. despite the energy drink company's ongoing legal issues.

Coca-Cola Co. is preparing to assume a minority stake in Monster Beverage Corp. despite the energy drink company's ongoing legal issues.

Coke announced plans last summer to acquire 16.7 percent of California-based Monster for more than $2 billion, a deal that's expected to close early next month.

The move, however, could prove risky amid questions about the safety of energy drinks.

The U.S. Food and Drug Administration is investigating whether the drinks are more dangerous than other caffeinated beverages -- a probe that includes consideration of 31 deaths and more than 300 "adverse event" reports since 2004.

Meanwhile, The Wall Street Journal reports that Monster faces at least five product liability lawsuits and recently settled two wrongful death lawsuits.

In addition, San Francisco's city attorney and the New York attorney general alleged the company improperly marketed its products, respectively, to children and to underage college students as a drink mixer. Three misleading marketing lawsuits against the company have been dismissed since 2013.

Monster said its products are safe and that it does not expect pending legal issues to affect the company. Meanwhile, its revenue increased by nearly 10 percent in 2014, and after years of looking into the company, Coke decided to jump into the $10 billion U.S. energy drink market.

Coke made other recent moves in an effort to combat struggling soft drink performance, but Monster likely poses a far greater risk to the image of the world's largest beverage company than premium milk or lower-calorie sodas.

“We’re impressed with Monster’s performance today and are confident in Monster’s ability to perform over the long term,” CEO Muhtar Kent said after announcing the deal last summer.

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