Coke (KO) Reassessing Energy Drink Strategy--Hansen Natural (HANS)?

According to Beverage Business Insights, Coca-Cola (NYSE: KO) is reconsidering its energy strategy, including a possible distribution alliance or deal with Hansen Natural (Nasdaq: HANS). The publication made it clear that the potential deal may not necessarily include an equity stake.

UBS thinks that a Coke and Hansen combination makes practical sense, but a deal is not too imminent. The UBS report also said Coca-Cola is unlikely to renew its Rockstar deal which expires in May of next year. Therefore, UBS believes a Coca-Cola, Hansen distribution deal would be most beneficial in the short-term, as Coke is highly unlikely to make another multiple billion dollar acquisition this year.

Below are six reasons UBS thinks Coke and a Hansens combination makes sense.

1. Coke brands losing share in energy, the industry’s fastest growing category
2. Coke can capture external distribution profits (+$400m)
3. Monster brand can be leveraged globally
4. advertising, marketing, and SG&A cost-savings
5. capable management in place
6. expansion into food service.

UBS estimates a full-takeout value for Hansen Natural at $50 per share. That is a 100% premium to what Hansen Natural is trading at today. Booyah!

Hansen Natural Corporation (Hansen) develops, markets, sells and distributes alternative beverage category.
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