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These agreements will complement Hansen's existing relationship with Anheuser-Busch and will not affect Hansen's agreement with AB for the on-premise channel nationwide.

The 20-year agreements will take effect at the beginning in November 2008 in the US and parts of Western Europe, and in early 2009 in Canada. As part of the agreement with TCCC, Hansen has the right to negotiate distribution agreements with additional Coca-Cola bottlers to service the TCCC territory not covered by CCE.

"We're pleased to be partnering with the world's leading beverage system to expand the retail presence and penetration of our Monster Energy drinks," said Rodney Sacks, chairman and CEO of Hansen. "We believe the relationship with The Coca-Cola Company and Coca-Cola Enterprises will enable us to build on the success of our Monster Energy brand in North America and expand into fertile new international markets.

"In the US, the relationship will complement our existing long-term arrangements with Anheuser-Busch distributors, which have been, and we expect will continue to be, very important to Hansen. We believe that the combination of these two leading distribution systems will provide us with an unrivalled distribution network in North America."

No 1 by volume

According to AC Nielsen data, Monster Energy is the number one energy drink by volume in the US. The agreements in North America include all Monster Energy trademark beverages, including Monster Energy and Java Monster as well as the Lost Energy brand. In Europe, the agreement includes the distribution of Monster Energy in the CCE countries – Great Britain, France, Belgium, the Netherlands, Luxembourg and Monaco.

"The Coca-Cola System has taken a multi-faceted approach to becoming one of the key players in the fast growing energy drink category," said Coca-Cola North America president, Sandy Douglas. "We're pleased that our bottlers are now able to distribute this brand as part of our diverse portfolio of leading sparkling and still beverage brands in North America and Europe."

"Monster Energy drinks are strong additions to our energy portfolio, reinforcing our strategic priority of being number one or a strong number two in every category in which we choose to compete," said Coca-Cola Enterprises chairman and CEO, John Brock. "Monster Energy continues to outperform the energy category in the US and we look forward to bringing another proven brand to our territories in Western Europe."

Market reaction

Hansen's shares fell about 11% on news of the deal. “Some investors who had hoped that Coke might take an equity stake in the energy drinks company may have been disappointed,” said Sachin Shah, an analyst who focuses on merger arbitrage at ICAP Equities.

Hansen also said it will make payments to existing distributors whose deals will be terminated, and it currently expects the related pretax expenses to be in the range of $110m to $130m. Hansen said its new distributors would help cover a "significant portion” of those costs.

JPMorgan analyst John Faucher estimated that about half of Monster's US volume will move to the Coca-Cola distribution system, while Dr Pepper Snapple Group will lose its US distribution of the brand.

In a separate statement, Dr Pepper said it expects to receive formal notification from Hansen Natural terminating its agreements to distribute Monster Energy. DPS said it generated about $170m in revenue and $30m in operating profits distributing Hansen Natural brands in the US in the last year.