Monster Beverage Co. MNST, +2.04% shares dropped as much as 9% in after-hours trading Wednesday after the energy-drink company revealed that beverage giant and partner Coca-Cola Co. KO, +0.53% could compete with Monster if it can win an arbitration fight. Monster shares were trading higher after the company reported quarterly earnings, but sharply dropped after Chief Executive Rodney Sacks said that Coke planned to release two new drinks that Monster considered competitive, which could go against a deal the two companies struck in 2015. The deal includes exceptions that Coke is trying to claim, Sacks explained, and the dispute entered into arbitration last week. Coke, which is the largest shareholder in Monster, has delayed the launch of its potential competitors until April 2019 amid the dispute, Sacks said. “We’ve agreed to go to arbitration civilly and determine what course of action is appropriate,” Sacks said later in response to a question from an analyst. “So nothing has changed in the relationship and the manner in which this situation will be dealt with will be conducted from both parties on a civil basis according to the agreement.” Analysts have suggested that Coke should fully acquire Monster to boost its presence in the energy-drink market. Shares bounced around during the call and were most recently down more than 5% in after-hours action.
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