Credit Suisse: Coke To Prove Monster 'Benefits Of Scale'
“The transaction should bring several benefits, including stronger growth (particularly outside the US), faster margin expansion and greater management focus,” writes analyst Michael Steib.
Credit Suisse assumes Monster will return most of the cash from Coca-Cola to shareholders, thus counteracting the share dilution. The note further states that the deal will boost EPS by 2016.
International distribution is one of the biggest benefits Coca-Cola will provide, according to Steib.
“Damage issues and transportation costs should be greatly reduced and route-to-market strategies enhanced. The transfer of KO's brands provides benefits of scale: in a number of international geographies the transaction more than doubles the size of Monster's energy business.”
The note further states that Monster will benefit from Coca-Cola’s expertise in branding.
Shares of Monster were last trading at $92.45, six percent below Credit Suisse’s price target.
Latest Ratings for KO
|Dec 2014||Tigress Financial||Upgrades||Neutral||Buy|
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