Monster Beverage Corp. won bankruptcy court approval to acquire former rival Bang Energy out of Chapter 11 for $362 million and settle litigation between the energy drink companies.
(Bloomberg) — Monster Beverage Corp. won bankruptcy court approval to acquire former rival Bang Energy out of Chapter 11 for $362 million and settle litigation between the energy drink companies.
Judge Peter Russin said Wednesday he’d approve the settlement and sale — averting the shutdown of Bang Energy, which has faced an uncertain future after its board fired founder and former Chief Executive Officer Jack Owoc earlier this year.
The tie-up remains subject to additional customary closing conditions, lawyers said.
Judge Russin also said he’d approve a resolution to false advertising litigation against the maker of Bang Energy. Bang maker Vital Pharmaceuticals Inc. filed bankruptcy last October, months after a California jury awarded Monster $293 million over Bang’s “super creatine” branding on its products.
The deal nearly fell apart before the US Federal Trade Commission granted early termination of its antitrust review of the merger between Monster and Bang. Bang lawyers said at earlier hearings that the company could shut down because it was running out of cash and argued its merger with Monster qualified for early termination under the so-called failing firm defense.
Monster Executive Vice President and Deputy General Counsel Paul Dechary said in a sworn statement the company has substantial resources to satisfy financial obligations under the Bang deal. Monster has a market capitalization of about $59 billion and cash and cash equivalents of about $3 billion, Dechary said.
The sale means Bang will survive bankruptcy, though the parent company has given notice that it could lay off 400 of its roughly 700 employees. A Bang lawyer said the notice was a precaution and Monster hasn’t determined what employees it will retain.
Owoc’s lawyer Jonathan Feldman criticized Bang lawyers for not having a more somber tone during Wednesday’s hearing in light of the potential job cuts.
Judge Russin said possible layoffs are unfortunate but that the sale will preserve at least 300 jobs and was the best option for Bang even if a sale of the energy drink maker to Monster “is a disaster” from Owoc’s point-of-view.
Owoc, meanwhile, has continued to challenge the direction of Vital’s Chapter 11 and attempted to remove from the bankruptcy case a Bang affiliate that owns a valuable Phoenix bottling facility, a request Judge Russin denied on Wednesday.
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