Talks about a combination between energy drink maker Monster Beverage Group and the brewer that makes Corona, Constellation Brands, may be making progress, according to people familiar with the matter.
A merger deal could be reached in the coming weeks if talks go smoothly, people familiar with the matter said, asking not to be identified because the information is private. The similarly sized companies would have a combined market capitalization of around $90 billion.
Shares of Monster, which counts Coca-Cola as its main shareholder, had fallen about 8% as of Monday since Bloomberg News reported in November that it had held talks with advisers about a possible partnership with Constellation, whose Class A shares have remained stable during that period.
Monster announced in January the $330 million purchase of CANarchy Craft Brewery LLC. That deal added about a half-dozen brands to its beverage portfolio, including Squatters, which makes Juicy IPAs.
The alliance with Constellation would represent a much more significant bet on alcoholic beverages. Such a transaction could also have implications for Coca-Cola’s nearly 20% stake in Monster and its distribution pact with the beverage maker.
Any deal would create a unique mix of energy drinks, alcoholic beverages, and potentially cannabis products. Constellation also has a nearly 40% stake in Canopy Growth Corp., a Canadian cannabis company that sells THC-infused beverages in that country.
While an alliance with Constellation could open up growth opportunities for Monster, some analysts see limited opportunity for cost savings because they operate in different segments.
The deal could take longer to come or could still fall apart, the people said. The exact structure of the transaction under discussion was not immediately known. Representatives for Monster Beverage and Constellation declined to comment.
The potential transaction will likely require the support of the Sands family, which is a major shareholder in Constellation and sits at the top of the board.
The Victor, New York-based firm began as a winemaker in 1945. It now sells Corona Extra and Modelo Especial in the United States, as well as Casa Noble Tequila, Svedka Vodka and High West Whisky.
