At least that was the thinking of TheStreet's founder and Action Alerts PLUS portfolio manager Jim Cramer. Coca-Cola, the Atlanta-based beverage giant, has a 16.7% stake in Monster.
On his Twitter Inc. account, Cramer noted that Monster shares reached an all-time high of $56.25 on Thursday, Aug. 31, suggesting that a Coca-Cola takeover could be in the works.
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Under the new leadership of CEO James Quincey, Wall Street has been anxiously awaiting Coca-Cola to make a deal that jump-starts sluggish growth. Coca-Cola closed on its transaction to acquire a 16.7% stake in Monster for $2.2 billion on June 12, 2015, so a full takeover would be a possible next step.
Quincey previously served as Coca-Cola's COO, but replaced former CEO Muhtar Kent on May 1. He has been widely regarded on Wall Street as acquisition friendly.
On a media earnings call in April, Quincey said the company will be "very focused on expanding in other categories that are attractive to us" and sees "tremendous opportunity" to grow the Coca-Cola brand.
TheStreet looks at why Coca-Cola should buy Monster.
Monster flaunts an attractive business.
People are buying Monster drinks, driven by a healthy dose of innovation. In November, for example, Monster launched what it calls a "super soda" - its new Mutant soft drink. Fueled by that innovation, Monster saw its revenue climb 9.6% to $907.1 million while net sales from its drinks segment increased 9.7% to $815.3 million. Gross profit in the quarter rose to 64.3% from 62.6% in the year-ago period.
Coca-Cola needs to spruce things up.
Given its stretch of sluggish results, it's time for Coca-Cola to diversify its portfolio. While, yes, it would be wise for Coca-Cola to consider buying a food company to compete better with PepsiCo Inc. (PEP - Get Report) , the company's commitment to being a "total beverage company" would be strengthened by tacking on an energy drink maker. Coca-Cola has enough water brands (smartwater, Dasani), juice (Simply Orange, Minute Maid) and soda (Coca-Cola, Sprite).
Coca-Cola has the opportunity to capture a lot of market share.
As of 2015, Coca-Cola held a 17.4% share of the global sports and energy drinks market, one spot from the top under PepsiCo, which held 29.3%. Monster ranked fourth with 5.9% of the market share in the sports and energy space, under rival Red Bull GmbH, third, with 6.7% of the share, according to Statista data. Combine Coca-Cola and Monster and they can edge PepsiCo out of the dominant seat within the important space.
Coca-Cola declined to comment for this story.
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