Last week's news that Monster, the energy drink giant, made a bid to buy Bang Energy in bankruptcy court for $362 million sent shockwaves through the industry. 

 Some cynics speculated that this was always the goal. And that the number #1 energy drink maker sued their competition into bankruptcy, enabling Monster to pick it up for pennies on the dollar.

 Monster Beverage released a statement today confirming that it would acquire the bankrupt beverage maker. And that the proposed deal is still subject to approval by the court.

The deal is set to close through Monster's recently formed subsidiary Blast Asset Acquisition.

There are also unconfirmed reports that Coca-Cola was negotiating directly with Bang’s CEO, Jack Owoc to purchase the company for $8 billion.

The inside story of this series of high-stakes courtroom dramas is nothing short of a rollercoaster ride. And it’s filled with secret negotiations and surprising revelations.

At the heart of the story is the high-profile betrayal of Jack Owoc, the controversial founder who skyrocketed the Bang brand to success. And if you are sitting on the other side Owoc was the guy who fired the first shots at Monster to create a more contentious and litigious situation than it ever should have been.

Bid to Buy Delayed by FTC

Monster Energy is set to buy rival Bang Energy aka Vital Pharmaceuticals (VPX) for up to $362 million, according to a June 28 court filing. Blast Asset Acquisition, a Monster subsidiary, was the only successful bidder for substantially all of Bang’s assets.

 The disclosure came with documents filed on 6/28 as the Notice of Auction Cancellation and Successful Bidder. 

NOTICE OF AUCTION CANCELLATION AND SUCCESSFUL BIDDER

The document, filed in the U.S. Bankruptcy Court for the Southern District of Florida, said the purchase by Monster is being delayed following a review from the Federal Trade Commission. 

Unless the FTC ends the review early then court docs mandate that if requirements tied to the merger don’t expire or aren’t terminated by June 30, the deal falls apart. 

Bang and Monster could agree to an extension, the court filing noted. If the deal isn’t extended, Bang will be forced to liquidate.

Legal Battles

Monster’s decision to acquire Bang is the culmination of a series of legal battles between the Bang and Monster energy drink makers.

In the last two years, Bang and its parent VPX have lost two landmark legal battles with Monster. 

In January 2022, Monster Energy and its affiliate, Orange Bang, won in a California-based arbitration case. The case was related to a trademark infringement claim against VPX.

Then in September 2022, Monster Energy got a massive jury award in a separate case against VPX and Owoc. 

A jury awarded Monster Energy $292.9 million based on claims of false advertising, trade secret misappropriation, violation of the federal Computer Fraud and Abuse Act, and interference with retail shelf space contracts. 

 It was no surprise that Monster was identified as Bang’s largest unsecured creditor in bankruptcy court papers.

Besides the legal conflicts with Monster and the breakup with snack and beverage giant PepsiCo, Bang has also experienced the ouster of its outspoken CEO Jack Owoc. And the company initially filed for bankruptcy in October 2022.

Immediately after the initial bankruptcy filing Kathy Cole was hired as the new COO. She was tasked with the “integration of a new high-performance operations model.” Unfortunately, she left the company a few months later. 

 Meanwhile, several large chain retailers reportedly stopped carrying Bang.

Jack Owoc man on a mission

 John “Jack” Owoc was the company founder. And he previously was listed as Bang’s CEO and sole shareholder.

In the months after its bankruptcy, Owoc claimed Bang was on track to complete “the greatest comeback in beverage history.” He talked about rallying around the new products and embracing independent distribution partners to replace Pepsico. 

Owoc, the controversial founder of Bang Energy was shut out of negotiations by the parent company VPX. With no notice, he and his wife Megan the Senior Vice President of Marketing were fired. 

Owoc was out as the company’s chief executive and chief science officer, and from its board of directors, where he had served as chairman. John C. DiDonato, Vital’s chief transformation officer, was appointed interim CEO.

The company announced the move in a brief press release on March 9.

“On behalf of the Board of Directors, we acknowledge Jack’s vision in founding this leading brand and creating a world-class product in the energy drink category. As the Company continues to pursue value maximization, we are grateful to Mr. DiDonato and the executive leadership team for their stewardship and to the talented and hard-working members of the Bang Energy team for their unyielding commitment to the brand,” said Steve Panagos, VPX Chairman of the Board.

According to the release, DiDonato had “more than 35 years of experience leading companies through complex financial and operational transformations.”

As part of the restructuring, Gene Bukovi was elevated to the position of Chief Operating Officer.

Owoc sidelined

Owoc responded to the ouster by emailing all Company personnel with an update entitled “HOSTILE TAKEOVER – MEG AND JACK FIRED!” 

Before starting Bang Owoc had a career in CPG and supplements. He often spoke at industry events, wrote a book, and always had something to say.  Owoc’s personality and management style were core elements of the brand’s identity.

Owoc was his baby. And VPX was financing the operation.

 When things started to unravel, Bang was the third-largest energy drink behind Red Bull and Monster. And it added another income stream with a successful new wave of workout-oriented, high-caffeine beverages.

But the problem was that Owoc’s approach may have also contributed to the legal mess that forced VPX to file for bankruptcy.

VPX shot back on June 16 when it filed an emergency motion to hold Jack Owoc and his wife Megan in contempt. And accused the Owacs of failing to return any Bang Energy records, physical property, computers and devices, and access to company servers. 

According to the contempt order, “Neither of the Owocs returned any devices, documents, or other property following their termination. While the Debtors moved swiftly to suspend the Owocs’ access to the Company’s servers upon their termination, Mr. Owoc was able to gain access to a legacy email domain, from which he sent an email to all Company personnel entitled “HOSTILE TAKEOVER – MEG AND JACK FIRED!”

Bid to buy in Bankruptcy  

At the time of its October 2022 Chapter 11 filing, the company had 1,103 employees.

During a court hearing on Thursday, Bang lawyer Andrew Sorkin said the company will halt all operations, leading to the loss of about 700 jobs, if the Monster deal falls apart, according to Bloomberg. This confirms that there are about 400 fewer employees now.

He told the court the FTC needs to make a determination within 24 hours because Monster’s asset purchase agreement terminates if the deal doesn’t clear the agency’s review process by June 30.

“Either there’s a sale to Monster or there will be an immediate liquidation,” Sorkin said. 

In April, Stifel analyst Mark Astrachan said Monster was “best-positioned to acquire” Bang, noting that in addition to being its largest creditor, it is a co-rights holder to a 5% perpetual royalty/license for the use of the Bang beverage trademark. The license rights were negotiated as payment to offset some of Bang’s court-ordered losses.

At the same time, Astrchan said Monster was challenging Bang’s ability to transfer the Bang trademark license to an acquirer, which would give Monster “near total control over Bang’s future.”

As part of the acquisition, Monster also will take control of a Bang-operated 400,000-square-foot manufacturing facility near Phoenix. It’s estimated that this plant alone would be valued at more than the total Monster will pay for Bang.

The Phoenix facility can produce about 15% of Monster’s U.S. volumes and help it supply a larger portion of the company’s West Coast production needs.

Monster, Bang, and Coca-Cola Energy

Prior to Monster’s lawsuits, Bang was a fast-growing competitor to Monster. In 2015 sales at Bang amounted to 6.1 million cases.  The sales volume of Bang energy drinks in the United States peaked in 2021 at 47.1 million 192-ounce cases.

According to the legal docs Bang’s market share was 2.6% of the U.S. energy drink category compared to Monster’s 35.1% share. 

In 2022, Monster Beverage’s global net sales amounted to nearly 6.3 billion U.S. dollars. The beverage company’s net sales increased with each consecutive year since 2008 when the numbers stood at an estimated one billion U.S. dollars.

Monster Beverage is an American Beverage company, headquartered in Corona, California.

Monster’s most popular product is an energy drink named Monster Energy. Also sold under the brand are Espresso Monster, Monster Rehab, and Monster Dragon Tea, which is a tea-based energy drink.

Coke bought a 16.7% stake in Monster in 2015. And they also have a distribution agreement with Monster in both the US and Canada. 

Coke attempted to enter the marketplace with Coca-Cola Energy which went into the U.S. market in January 2020. Sales were terrible. And it was pulled from the shelves in mid-2021.

Monster's bid to buy Bang seems like a winding road at this point. But it's only been 18 months since the devastating lawsuits were filed. It's only been less than a year since the initial bankruptcy. And just 4 months ago that Owoc claimed a "hostile takeover" of Bang was kicking him to the curb.