CORONA, Calif. - Monster Beverage Corporation (NASDAQ:MNST) has launched a modified Dutch auction tender offer to repurchase up to $3.0 billion of its common stock, with share prices ranging from $53.00 to $60.00. The tender offer commenced today and is set to expire on June 5, 2024, unless extended or terminated earlier by the company.
The buyback will be financed through a mix of $2.0 billion in cash, $750.0 million from a new term loan, and $250.0 million from a new revolving credit facility. The completion of the tender offer is contingent upon securing a credit agreement and the funding of at least $1.0 billion from the term loan and revolving credit facility at least five business days before the tender offer's expiration.
Shareholders can tender all or part of their shares within the specified price range, or choose not to specify a price, in which case the purchase price will be determined according to the tender offer terms. The final purchase price will be the lowest that allows Monster to buy the maximum number of shares totaling up to $3.0 billion. If the offer is fully subscribed, approximately 4.8% to 5.4% of the company's issued and outstanding shares as of April 22, 2024, will be repurchased.
Co-CEOs Rodney Sacks and Hilton Schlosberg plan to tender up to 610,000 shares each for diversification and estate planning. Moreover, Sterling Trustees LLC, associated with Sacks and Schlosberg's family trusts, intends to tender up to 20,500,000 shares. Board members Mark S. Vidergauz and Mark J. Hall, along with executive officers Thomas J. Kelly and Emelie C. Tirre, have also indicated their intention to tender shares.
This tender offer is separate from Monster's existing stock repurchase programs. It aims to provide liquidity for shareholders with minimal market disruption. Mr. Sacks has expressed his intention to reduce his day-to-day management role starting in 2025, remaining as Chairman, while Mr. Schlosberg would assume the role of CEO.
Evercore Group L.L.C. and J.P. Morgan Securities LLC are acting as dealer managers for the tender offer. Shareholders are advised to read the Offer to Purchase and related materials, which will be filed with the SEC, for detailed information and terms of the tender offer. This press release is based on a press release statement and does not constitute an offer to buy or a recommendation to tender shares.
InvestingPro Insights
As Monster Beverage Corporation (NASDAQ:MNST) embarks on its ambitious $3.0 billion share repurchase plan, investors are closely monitoring the company's financial health and market performance.
According to InvestingPro data, Monster Beverage boasts a robust market capitalization of $56.95 billion, reflecting the scale of its operations and investor confidence. The company's P/E ratio, a key metric for valuing a company, stands at 33.88, indicating a premium valuation compared to some industry peers.
Monster's financial resilience is evident from its revenue growth, which was 13.08% over the last twelve months as of Q1 2024. This growth momentum is further underscored by a gross profit margin of 53.45%, showcasing the company's ability to maintain profitability amidst competitive pressures. Notably, the company's operating income margin of 28.19% during the same period demonstrates efficient management and a strong operational performance.
InvestingPro Tips highlight Monster Beverage's solid liquidity position, as it holds more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations. This is particularly relevant as the company finances its tender offer with a significant cash component, ensuring stability and confidence among investors.
Moreover, Monster Beverage is trading at a high earnings multiple, which could be an indicator of market expectations for future growth, despite some analysts revising their earnings estimates downwards for the upcoming period.
For investors seeking a deeper analysis, InvestingPro offers additional insights, with a total of 12 InvestingPro Tips available for Monster Beverage Corporation, which can be found at https://www.investing.com/pro/MNST. To enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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