News

Monster acquires AFF

29 Feb 2016

Monster Beverage is to acquire flavour supplier and long-time business partner, American Fruits & Flavors ("AFF"), for $690 million, in a transaction that the company said will bring Monster's primary flavour supplier in-house.

Monster Beverage is to acquire flavour supplier and long-time business partner, American Fruits & Flavors ("AFF"), for $690 million, in a transaction that the company said will bring Monster's primary flavour supplier in-house, secure the intellectual property of Monster's most important flavours in perpetuity and further enhance its flavour development and global flavour footprint capabilities.

"It is important to acknowledge this transaction represents much more than the acquisition of AFF," said Fred Farago, Founder and President of AFF. "We view today's announcement as the integration of two companies that have enjoyed a tremendously symbiotic relationship over many years. We look forward to joining the highly respected and experienced Monster team to help the company further enhance its position as a global leader in the industry."

The acquisition brings Monster's primary flavour supplier in-house and secures Monster's ownership of the unique intellectual property created with AFF for its flagship Monster Energy energy drinks as well as several other key flavours in its beverage portfolio.

"It is with great pleasure that we announce the acquisition of AFF as it marks a tremendous step in the continuing evolution of Monster," said Rodney C. Sacks, Chairman and Chief Executive Officer of Monster. "Not only have we secured the intellectual property of our flagship green energy drink and many of our other key flavors, but we are also partnering with an organization I have personally worked with and known for over 20 years," Sacks said. "This transaction provides Monster a unique opportunity to leverage new flavor technologies and differentiate ourselves from our largest competitors who do not have these capabilities."

Sacks added that AFF's history of superb customer satisfaction, service and flavors expertise seamlessly complements Monster's business while providing an excellent platform for continued innovation.

"The transaction is strategic to Monster and presents a unique opportunity for us to take ownership of our most important flavors. It is also beneficial from a growth perspective and enhances earnings per share," said Hilton H. Schlosberg, Monster's Vice Chairman and President. "We have taken an important step by integrating our existing and new flavor development and flavor production under the umbrella of our ownership and are confident AFF will act as a catalyst for further success.”

The company said that the transaction also provides Monster with an opportunity to more effectively and profitably deploy AFF's flavour keys and intellectual property in Monster's growing international supply chain strategy.

The two companies have worked closely together since the mid-1990s in developing new products and taste profiles. AFF has grown at an approximately 8% organic revenue CAGR over the last four years, with Monster as its largest customer, representing approximately 87% of AFF's revenues in 2015. As a result of their highly integrated and close historical working relationship, the companies expect a seamless integration.

The acquisition is expected to be accretive to Monster's earnings during 2016.