MNST, STZ Stocks Alert: Is Monster About to Merge With Constellation Brands?

Rumors are heating up today that Monster Beverage (NASDAQ:MNST) and Constellation Brands (NYSE:STZ) are preparing for a big merger. Indeed, MNST and STZ stocks are in flux today amid numerous reports indicating the two companies are in negotiations. With that said, the jury is still out on whether the potential acquisition would result in meaningful synergy.

A can of Monster Beverage (MNST) energy drinks sits on top of a skateboard.
Source: Domagoj Kovacic /

So, what do you need to know about Monster and Constellation today?

MNST stock was up this morning as investors considered the implication of a merger of this size between two well-known beverage makers. The two companies are similar in size and, post-merge, would have a market capitalization around $90 billion.

As per an anonymous source from Bloomberg, a merger agreement could be just a matter of weeks away should negotiations go well. The merger news isn’t completely out of left field, however, as Bloomberg reported on a similar rumor this past November.

For Monster, this is just the latest mergers and acquisitions (M&A) deal in the works. If you recall, last month the beverage company announced plans to acquire CANarchy Craft Brewery Collective for $330 million. As such, today’s rumor further validates Monster’s interest in the alcoholic beverage space.

Analysts remain split over the potential deal, which continues to reveal information about both companies’ interests going into the merger. Let’s take a further look.

MNST and STZ Stocks See Mixed Day on Merger Rumor

Investors are split on whether the potential merger provides true added value to the companies, or is simply additional consolidation in the beverage market. Some analysts believe this could be a fast-track for Monster to get into alcohol, while others claim it fails to provide any tangible synergies.

Constellation has been rapidly expanding its catalog of beverages, even exploring potential cannabis-infused drinks. Famously, Constellation owns nearly 40% of Canopy Growth (NASDAQ:CGC), a Canadian marijuana company. Canopy currently sells THC-infused drinks in Canada. A deal with Monster could mean a brand new concoction out of the combined company.

Meanwhile, some view today’s rumor as an invitation for the Coca-Cola Company (NYSE:KO) to go ahead and outright acquire Monster. Coca-Cola currently owns nearly 20% of Monster. Therefore, many view it as the logical next step for an already familiar brand. Additionally, some believe a partnership with Constellation could hurt Monster, and consequently Coca-Cola’s brand image.

It seems the uncertain nature of the deal has bled over to the stock market. MNST stock is trending close to even heading into market close, despite its early morning jump. Meanwhile, STZ is down more than 6% at the time of writing, as the markets clearly reacted unfavorably to the rumor.

Whether today’s speculation will draw more interest is unclear. Investors of both are likely waiting to find out where the future takes both companies.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC