Monster Beverage Corporation Announces Final Results of Tender Offer
Monster Beverage (NASDAQ: MNST) announced the final results of its Dutch auction tender offer, which closed on June 5, 2024. The company will acquire 56,603,773 shares at $53.00 per share, representing about 5.4% of its outstanding shares, for a total of approximately $3.0 billion. A total of 119,018,767 shares were tendered. The final proration factor is approximately 47.18%. Co-CEOs Rodney Sacks and Hilton Schlosberg tendered a portion of their shares, with a portion accepted for purchase. The company may also consider additional repurchases subject to market conditions.
- Monster will purchase 56,603,773 shares at $53.00 each, totaling about $3.0 billion, which can potentially increase shareholder value.
- The tender offer represents 5.4% of Monster’s outstanding shares, potentially boosting earnings per share.
- Co-CEOs Rodney Sacks and Hilton Schlosberg participated, showing confidence in the tender.
- Monster's consideration for future additional share repurchases indicates potential ongoing support for the stock price.
- A large number of shares, 119,018,767, were tendered, indicating possible shareholder eagerness to sell at the offered price.
- The final proration factor of 47.18% means not all tendered shares were accepted, potentially leaving some shareholders dissatisfied.
- The tender offer costs $3.0 billion, which is a significant cash outflow that could impact Monster's liquidity.
- Future share repurchases are subject to many conditions, adding uncertainty.
Insights
Monster Beverage Corporation's recent tender offer results are significant for several reasons. Firstly, repurchasing approximately 5.4% of its outstanding shares at a price of $53 per share translates into a substantial aggregate purchase price of approximately $3.0 billion. This move can be viewed as an effort to optimize the company's capital structure by returning value to shareholders, potentially signaling strong cash flow and a confident outlook from management.
For retail investors, it's important to note that a tender offer like this one can impact the supply-demand dynamics of the stock. By reducing the number of shares outstanding, Monster aims to increase its earnings per share (EPS) and potentially boost the stock price. However, the tender offer was only partially accepted, with a final proration factor of approximately 47.18%. This means some investors who tendered shares did not have all of them bought, indicating high shareholder interest at the offered price.
In the short term, this capital deployment could offer a price support mechanism, but retail investors should consider the long-term implications, such as the potential for reduced financial flexibility. The company has kept the door open for future share repurchases depending on market conditions, which might influence future stock performance as well.
Analyzing Monster Beverage Corporation's market strategy reveals a focus on reinforcing shareholder value. The decision to repurchase shares through a modified Dutch auction tender offer highlights their goal to utilize excess cash effectively. This tactic can often be an indicator of a company's attempt to signal undervaluation or confidence in its long-term growth.
The fact that a considerable number of shares were tendered (119,018,767) but only a fraction accepted implies that shareholders were eager to capitalize on the offered price, potentially reflecting a consensus that the market price might not surpass the tender offer price in the near term. This high participation rate might also indicate that investors perceive the current market conditions as uncertain, preferring to secure a known payout.
From an industry perspective, such share repurchase activities can differ. For Monster, operating in a highly competitive beverage market, this move might also suggest a strategic shift towards stronger financial maneuvers over aggressive expansion or new product investments, possibly reflecting matured growth expectations. However, investors should monitor how this might affect Monster's competitive positioning and innovation capabilities moving forward.
Monster Will Acquire 56,603,773 Shares at
CORONA, Calif., June 10, 2024 (GLOBE NEWSWIRE) -- Monster Beverage Corporation (“Monster”) (NASDAQ: MNST) announced today the final results of its modified “Dutch auction” tender offer, which expired at 11:59 p.m., New York City time, on June 5, 2024.
Based on the final count by Equiniti Trust Company, LLC, the depositary for the tender offer, a total of 119,018,767 shares of Monster’s common stock were validly tendered and not validly withdrawn at the final purchase price of
In accordance with the terms and conditions of the tender offer, Monster accepted for purchase a total of 56,603,773 shares of its common stock, representing approximately
Because the number of shares tendered at the final purchase price of
Rodney Sacks and Hilton Schlosberg, who are Monster’s Co-CEOs and members of the Board of Directors, tendered 608,114 and 350,000 shares, respectively, that they beneficially own. Of these shares, 286,918 and 165,135, respectively, were accepted for purchase by Monster in the tender offer.
Sterling Trustees LLC, which controls certain trusts and entities for the benefit of certain family members of Messrs. Sacks and Schlosberg, tendered 8,450,000 shares on behalf of such trusts and entities. Of these shares, 3,986,853 were accepted for purchase by Monster in the tender offer.
Monster may purchase additional shares in the future in the open market subject to market conditions, or in private transactions, exchange offers, tender offers or otherwise. Under applicable securities laws, however, Monster may not repurchase any shares until June 21, 2024. Whether Monster makes additional repurchases in the future will depend on many factors, including the market price of the shares, Monster’s business and financial condition and general economic and market conditions.
Evercore Group L.L.C. and J.P. Morgan Securities LLC acted as dealer managers for the tender offer. D.F. King served as the information agent, and Equiniti Trust Company, LLC acted as the depositary. Questions regarding the tender offer may be directed to Evercore Group L.L.C. at (888) 474-0200 or J.P. Morgan Securities LLC at (877) 371-5947.
Monster Beverage Corporation
Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. Monster’s subsidiaries develop and market energy drinks, including Monster Energy® drinks, Monster Energy Ultra® energy drinks, Juice Monster® Energy + Juice energy drinks, Java Monster® non-carbonated coffee + energy drinks, Rehab® Monster® non-carbonated energy drinks, Monster Energy® Nitro energy drinks, Reign® Total Body Fuel high performance energy drinks, Reign Inferno® thermogenic fuel high performance energy drinks, Reign Storm® total wellness energy drinks, NOS® energy drinks, Full Throttle® energy drinks, Bang Energy® drinks, BPM® energy drinks, BU® energy drinks, Burn® energy drinks, Gladiator® energy drinks, Live+® energy drinks, Mother® energy drinks, Nalu® energy drinks, Play® and Power Play® (stylized) energy drinks, Relentless® energy drinks, Samurai® energy drinks, Ultra Energy® drinks, Predator® energy drinks and Fury® energy drinks. Monster’s subsidiaries also develop and market still and sparkling waters under the Monster Tour Water® brand name. Monster’s subsidiaries also develop and market craft beers, hard seltzers and flavored malt beverages under a number of brands, including Jai Alai® IPA, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin® hard seltzers, The Beast Unleashed® and Nasty Beast™ Hard Tea. For more information visit www.monsterbevcorp.com.
Caution Concerning Forward-Looking Statements
Certain statements made in this announcement may constitute “forward-looking statements.” Monster cautions that these statements are based on management’s current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of Monster, that could cause actual results and events to differ materially from the statements made herein. For a more detailed discussion of the risks that could affect Monster’s operating results, see Monster’s reports filed with the Securities and Exchange Commission, including Monster’s annual report on Form 10-K for the year ended December 31, 2023 and subsequently filed reports. Monster’s actual results could differ materially from those contained in the forward-looking statements, including with respect to the tender offer.
CONTACTS:
Rodney C. Sacks
Chairman and Co-Chief Executive Officer
(951) 739-6200
Hilton H. Schlosberg
Vice Chairman and Co-Chief Executive Officer
(951) 739-6200
Roger S. Pondel / Judy Lin
PondelWilkinson Inc.
(310) 279-5980
FAQ
What is the outcome of Monster Beverage's tender offer?
How many shares were tendered in Monster Beverage's offer?
What is the final proration factor for Monster Beverage's tender offer?
How many shares did Monster Beverage's Co-CEOs tender?
Will Monster Beverage make more share repurchases?
