Monster Beverage Corp. has agreed to purchase rival Bang Energy for $362 million — but the deal is now in danger of falling apart, as it has been slowed by a review by the U.S. Federal Trade Commission (FTC), according to court papers filed this week.
Further complicating the deal, it is contingent upon the companies getting court approval of a related settlement of Monster’s false advertising suit against Bang over “super creatine” branding last year, the news reports said. That settlement led Bang parent Vital Pharmaceuticals Inc. to file for Chapter 11 bankruptcy.
But Vital warned this week that the delay could force Bang to liquidate this week if the review isn’t terminated. Vital stated that its lenders support the proposed sale, and that the acquisition is the “only viable path” to repaying creditors.
A lawyer for Bang said that the company would cease operations, costing approximately 700 people their jobs, if the Monster transaction continues to be held up. “Either there’s a sale to Monster or there will be an immediate liquidation,” Bang lawyer Andrew Sorkin said, according to news reports.
Monster requires the deal close by August 3 and financing for its Chapter 11 case matures on June 30, Bang said in court papers. However, Bloomberg has reported in the past that the FTC and Justice Department have been requiring more information from companies in a crackdown on illegal mergers, a change that significantly adds to transaction timelines. Sorkin said the FTC could fast-track the early termination of the review since Bang would be forced to liquidate if Monster’s deal falls apart.