Topline
The Monster Beverage Corp.’s attempt to acquire rival Bang Energy out of bankruptcy could fall apart by the end of the day Friday if the Federal Trade Commission doesn’t finish its review into the $362 million deal, according to a lawyer for the company.
A Monster Energy drink arranged in the Brooklyn Borough of New York, U.S., on Tuesday, Nov. 23, … [+]
Key Facts
Bang Energy parent company Vital Pharmaceuticals filed for Chapter 11 bankruptcy protection in October and, in a court filing this week, said the proposed sale to Monster is “the only viable path” to repaying its creditors.
Bang lawyer Andrew Sorkin said during a Thursday court hearing that the company will have to liquidate if it’s unable to move forward with the sale by the time the bankruptcy case matures Friday, Bloomberg reported, but the FTC and Justice Department are still reviewing the merger.
U.S. antitrust agencies have said they will require companies to turn over much more information about their transactions than before as they try to crack down on illegal mergers, adding months of review to proposed deals.
The closure would cost 700 people their jobs, Sorkin said.
Key Background
Monster and Bang Energy, a drink made popular largely through its creator partnerships on TikTok, have met in court before. Months before Vital Pharmaceuticals declared bankruptcy, a jury awarded Monster $293 million after it sued the rival drink company for false advertising and other alleged misconduct, Reuters reported. Monster said Bang doesn’t include any actual creatine, and saying it did was not only misleading but could cause Monster to lose customers. Monster won, but says Bang continued using “Super Creatine” in its marketing. Monster went after Bang again in April, asking a judge to issue a court order forcing the company to stop. Bang argued that it would lose millions if it was forced to destroy its existing cans with the claims, but Monster won. Bang Energy first hit the market in 2012 with bright, bold cans and interesting flavors like “Cotton Candy” and “Radical Skadattle.” The company reported minimal spending on traditional media and instead geared their efforts toward Gen Z consumers with creator partnerships on social media. In May of 2020, IRI Worldwide reported that Bang had done $300 million in sales and named the brand the number one food and beverage “pacesetter.” Sales of the drinks peaked in 2021 and, by Q3 2022, were down 27%, according to Food Navigator.
Crucial Quote
“Either there’s a sale to Monster or there will be an immediate liquidation,” Sorkin said in court.
Further Reading
Monster Close to Buying Rival Bang Energy For $362 Million (Bloomberg)
FTC and DOJ Propose Changes to HSR Form for More Effective, Efficient Merger Review (FTC)
Long-Term Partnerships: The Next Wave of Influencer Marketing (Forbes)
Source: https://www.forbes.com/sites/maryroeloffs/2023/06/30/monster-energy-drinks-362-million-purchase-of-bang-teeters-on-brink-of-collapse/