By Dhirendra Tripathi
Investing.com – Monster Beverage stock (NASDAQ:MNST) rose 3% on Tuesday on reports merger talks between the energy drink-maker and Corona-brewer Constellation Brands (NYSE:STZ) are progressing.
A merger agreement could be reached in the coming weeks if negotiations proceed smoothly, Bloomberg said. The similarly sized companies have a combined market cap of about $90 billion.
Constellation shares fell 0.7%. Coca-Cola (NYSE:KO) owns almost 20% of Monster, according to Bloomberg.
A deal would create an entity that hosts a wide variety of beverages in its portfolio, ranging from energy drinks to alcohol.
Constellation also has a stake of almost 40% in Canopy Growth (TSX:WEED) (NASDAQ:CGC), a Canadian cannabis company that sells THC-infused drinks in that country. THC is the main psychoactive compound in cannabis and is also found in oils and capsules.
Experts warn that producing THC drinks might hurt the brand image of Monster, and more so that of a global brand like Coca-Cola while its supporters argue it gives the companies a chance to get exposure to a growing market. Supporters of the combination believe it gives Coca-Cola an exposure to the fast-growing market for cannabis products.