Prime Highlights:
- Keurig Dr Pepper is acquiring Dutch coffee and tea company JDE Peet’s in an $18 billion deal to strengthen its coffee business.
- After the acquisition, the company plans to split its beverage and coffee units into two separate U.S.-listed companies.
Key Facts:
- Keurig Dr Pepper will pay €31.85 ($37.3) per share, a 33% premium, and JDE Peet’s will pay a €0.36 per share dividend before the deal closes.
- The acquisition is expected to generate $400 million in cost synergies over the next three years.
Key Background:
Keurig Dr Pepper plans to boost its coffee business by buying Dutch coffee and tea company JDE Peet’s in a deal worth about $18 billion. This move comes as the U.S. company looks to grow its coffee sales. The beverage company looks to revitalize its struggling coffee division and expand its global presence.
Under the terms of the agreement, Keurig Dr Pepper will pay JDE Peet’s shareholders €31.85 ($37.3) per share in cash, representing a 33% premium over the Dutch company’s 90-day average stock price.
The deal is expected to generate $400 million in cost synergies over the next three years, boosting efficiency across operations. JDE Peet’s shares surged 17.18% in early trading in London following the announcement.
Keurig Dr Pepper, the company behind well-known brands like Dr Pepper, 7Up, Snapple, and Green Mountain Coffee, has seen its U.S. coffee sales drop. Its coffee segment declined by 0.2 per cent to $900 million in the second quarter; the decline was attributed to decreased shipments of the single-serve coffee pods and Keurig coffee makers. The company aims to attract consumers who prefer drinking coffee at home and is also exploring cold coffee offerings to compete with Starbucks and Dunkin.
When the acquisition is complete, Keurig Dr Pepper intends to divide its beverages and coffee businesses into separate American-listed companies. This is a strategic split that, in effect, undoes the 2018 merger that formed the third-largest beverage corporation in North America.
The newly formed coffee company is expected to generate $16 billion in annual net sales, led by current CFO Sudhanshu Priyadarshi. Meanwhile, the beverages unit will have projected net sales of $11 billion under CEO Tim Cofer. JDE Peet’s CEO, Rafael Oliveira, will continue to lead the Dutch company until the deal is finalized.
Analysts see the acquisition as a strategic move to strengthen Keurig Dr Pepper’s global coffee presence, drive growth, and improve operational efficiency, positioning the company to compete more effectively in the global coffee market.
