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Monster and Corona explore potential partnership

Monster Beverage and Constellation Brands are in the preliminary stages of considering a deal between the two companies, Bloomberg reported. Although people familiar with the matter reported that the two companies were in talks, the news outlet said that the terms of how these two companies would potentially partner remain unclear.

If these two beverage giants did move forward with a merger or asset transfer, together they would become a titan with almost $100 billion in market value. Monster’s current market value is $47 billion while Constellation Brands is worth $44 billion.

Such a deal would be the largest beverage deal since Coca-Cola acquired the remaining stake it did not own in BodyArmor for $5.6 billion in November.

However, Coca-Cola also poses an issue for this potential merge between the companies. The Atlanta-based drink company purchased a 16.7% stake in Monster in 2015 and is now the exclusive distributor for Monster. This relationship could complicate a deal with the North American-based Constellation Brands and it could also potentially damage the leverage that Monster has through Coca-Cola to angle for international expansion.

At the same time, a partnership with Constellation Brands poses possible collaboration opportunities. More and more, the lines between alcohol and nonalcoholic beverages are blurring. The distinction has become even less clear in recent months with the entrance of CBD into the mix. Constellation Brands and Monster are both well-positioned to collaborate on a cannabis-infused beverage.

Already, Constellation owns an almost 40% stake in the Canadian marijuana company Canopy Growth. Monster has previously indicated that it would be interested in exploring CBD or cannabis-infused beverages, but there is concern around the brand image if the energy drink company pursued that direction.

While no official announcement has been made, experts told Bloomberg that a deal between these two brands would have little overall synergy. Similarly, Food Dive reported that expert testimony on Seeking Alpha showed that a partnership would only result in incremental revenue opportunities.