Executive Summary

Competitive Landscape
Overview of Competitors
Positioning & Trends
Monster Beverage Corporation Overview
Strategy & Performance
Recent Acquisitions & Integration
National Beverage Corporation Overview
Company Summary
Business Model Overview
Strategic Recommendation
Synergies
Valuation Summary
Appendix

Mavericks

Team Mavericks
Jake Goldberg
Mark Jiang
Kamal Tamboli

Competitive Landscape
Company

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Characteristics
Privately held company (based in Austria)
2nd Highest market share based on volume (30% market share)
Global marketing & advertising: events, team ownerships, record labels, etc.
3rd Highest Market share based on volume (19% market share)
Distributed by Pepsi Co.
Produced by Coca-Cola, trademark licensed by Holley Performance
Sales behind Rockstar, Red Bull, and Monster
Initially distributed under Mountain Dew, manufactured by Pepsi Co.
4th in U.S. Retail Sales

Positioning
Second largest energy drink company in the
world with strong growth prospects- net sales
increased by 14.2% in the most recent quarter
Rapidly growing presence in over 70
countries- 5%+ market share growth in
Canada and Mexico last year
Robust cash balance and cash flow from
operations ($420mm balance and $110m
CFO as of June 2012)

Trends
Increasing commodity prices
Increased safety concerns
Product expansion

Competitors looking to offset

increased prices with higher volumes
and/or potential synergies
Share price fell due to uncertainty
regarding litigation and regulation
Strategic dispersion into new categories
including energy shots, rehab drinks,
and zero-calorie options.

Monster Situational Overview

YoY Revenue Growth

Mavericks

Recent International
Distribution Agreements

40%
30%
20%
10%
0%
2008

2009

Monsters Strategy

2010

2011

TTM

Performance

Outsources manufacturing/packaging,
buys ingredients from 3rd party
suppliers, delivers to 3rd party bottlers.

Industry leading gross margins

since 2004.

Expand product line with zero-calorie

and rehab drinks.

Rehab and Absolute Zero helped

Monster outperform category by
660bps in January 2012.

Bought back $500m of common stock

in order to boost shareholders value.

Stock price saw temporary gain, but

has continued to decrease over past 6
months.

2012 Quarterly Financial Performance

1. Schweppes Australia Pty

Q2 2009
Exclusive distribution
throughout Australia
of certain Monster
energy beverages.
2. Asahi Soft Drinks Co.
Q3 2011
Exclusive distribution
throughout Japan of
certain Monster
energy beverages
3. Lotte Chilsung Beverage Co.
Q3 2011
Exclusive distribution
throughout South
Korea of certain
Monster beverages.

Mavericks

Overview of National Beverage Corporation

Based out of Ft. Lauderdale, FL
Market Cap of $660mm
Ticker: NASDAW: FIZZ
Business Model
Top Institutional investors

Shares
(mm)

%
Ownership

Value (mm)

IBS Partners, Ltd.

33.300

71.93%

492.87

Kayne Anderson Rudnick

Investment Mgt, LLC

2.030

4.38%

30.78

Dimensional Fund Advisors, LP

1.050

2.28%

15.75

Caporella

0.942

2.04%

13.95

Manufacturing, marketing and sale of a diverse

portfolio of flavored beverage products.
Targets regional niche markets through
specialized marketing, custom flavor variety, and
value pricing.
Eg. Introduced a new line of flavors with
its Shasta soft drink that specifically
appealed to Hispanics in Georgia state
Opportunities

Strengths

Weaknesses

Threats

Untapped potential in
international expansion

Planned regulation by
some states to levy
soda tax
Intense competition

Rising labor wages in

the US

Broad product portfolio

encompassing non-alcoholic
beverages product line

Overdependence on the US
market for revenue generation

Industry leading Return on Equity

(49%)

Lack of economies of scale

Growing energy drinks

market in the U.S.

Strong brand recognition and

market presence in the southern U.S.
region

Poorly received energy drink

product called Rip It

Increase presence in the

northern U.S. region

Recommended Price Per Share: $19

Current Price as of 11/8/12 - $14.69

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All Values: FIZZ price per share

5

Strategic Recommendation:
Acquire National Beverage Corp.
Before Acquisition

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After Acquisition

Monster currently generates 90% of its

profits from its energy drink product
line

Employ diversified products to improve

market reach and mitigate dependency on
Monsters Energy Drink product line

The energy drink industry is affected

by increasing competition and
regulatory scrutiny

Synergies improve growth prospects and

decrease costs

Dependent on third-parties to produce

and distribute Monster products
Relatively weak distribution and market
share in the southern U.S. region

Synergies
Cost Synergies
Headcount Reduction
Combined administrative employees
and sales teams will be cut (SG&A)
Revenues Synergies
Cross Selling Monster and National
Beverage Company products

Expand market share in the southern U.S.

region through NBCs distributor and retail
relationships
Long-term potential to leverage Monsters
international distribution and marketing
channels

Transaction Overview
Suggested Price: $19/share (30% premium to
current share price), $884mm Valuation
40% Cash, 60% Debt
Accretion/Dilution Analysis:
Year 1: 5.1% Accretion
Year 2: 10.2% Accretion

Appendix

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A1. Discounted Cash Flow Analysis

A2. Selected Peer Analysis
A3. Precedent Transactions
A4. Accretion/Dilution Analysis
7

Mavericks

Discounted Cash Flow Analysis

Source: SEC Filings, Bloomberg

DCF Model Assumptions

Appendix A1

National Beverage Corporation

Selected Peer Analysis

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Appendix A2

Precedent Transactions

Source: Thompson One Banker

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Appendix A3

Accretion/Dilution Analysis

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Appendix A4