Monster Beverage has entered into a definitive agreement to acquire flavor supplier and long-time business partner, American Fruits & Flavors (AFF) for $690 million. The transaction will bring Monster’s primary flavor supplier in-house, secure the intellectual property of Monster’s most important flavors in perpetuity and further enhance its flavor development and global flavor footprint capabilities.
“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 CEO 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. 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 customer satisfaction, service, and flavors expertise seamlessly complements Monster’s business while providing an excellent platform for continued innovation. The transaction also provides Monster with an opportunity to more effectively and profitably deploy AFF’s flavor 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 transaction, which is expected to close in the first quarter of 2016, is subject to customary closing conditions.