Keurig Dr Pepper to buy JDE Peet’s in €15.7b deal
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The news: Keurig Dr Pepper (Keurig) agreed to buy JDE Peet’s for €15.7 billion ($28.27 billion) to form what it says will be the globe’s largest pure-play coffee business.
The numbers: Keurig will pay €31.85 a share in cash for the Dutch firm, a 20% premium over its closing price on 22 August, according to a statement released by the companies.
Shares in JDE Peet's surged 18% in early trading while Frankfurt-listed shares of Keurig Dr Pepper fell 1.3% by 7:30am BST.
The context: Keurig plans to split its coffee and drinks business units into two independent, US-listed companies once the deal is completed.
Keurig said that Global Coffee Co., with around USD16 billion in combined annual net sales, will be well positioned to profit from the world's USD400 billion coffee market, while Beverage Co., with more than USD11 billion in yearly net sales, will focus on North America's USD300 billion refreshment beverage market.
Keurig says that the deal will unlock approximately USD400 million in anticipated cost synergies over the next three years and EPS accretion is expected to begin within 12 months.
European investment group, JAB Holdings, is a controlling shareholder in JDE Peet’s and retains a large minority stake in Keurig despite selling shares after a 2018 merger that combined Keurig and Dr Pepper. JAB is currently revamping its investment strategy to focus on insurance, but told the FT in a statement that it will hold an almost 5% stake in both the coffee and beverage groups.
What they said: Keurig CEO Tim Cofer said: “We are seizing an exceptional opportunity to create a global coffee giant. This is the right time for this transaction, with KDP in a position of operational and financial strength, momentum across our evolved portfolio, and increasing coffee category resilience. By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we are poised to generate significant shareholder value in both the near and long term."
The sources: Keurig Dr Pepper, Bloomberg, FT
