In a brewing mega acquisition deal, U.S. beverage giant Keurig Dr Pepper (KDP) will acquire Dutch coffee company JDE Peet’s for a reported $18.4 billion.
The all-cash deal, when complete, will result in the creation of two independent companies: Global Coffee Co., focused on coffee, and Beverage Co., focused on soft drinks and beverages.
“Today’s announcement marks a transformational moment in the beverage industry, as we build on KDP’s disruptive legacy by creating two winning companies, including a new global coffee champion,” said Tim Cofer, CEO, KDP, adding the combination allows it to “seize an exceptional opportunity to create a global coffee giant.”
Rafa Oliveira, CEO, JDE Peet’s, said: “We are excited to join forces with Keurig to chart the future of global coffee by leveraging our combined portfolio of the world’s most beloved coffee brands.”
JDE Peet’s shareholders will be paid €31.85 ($37.1) per share in cash by KDP, representing a total equity consideration of €15.7 billion ($18.29 billion). The two companies plan to realize more than $400 million in cost synergies within three years.
BBC News reported that shares of KDP sank as much as 7% when the acquisition was announced, owing to concerns that it was pivoting away from its strategy to create U.S. drinks juggernaut through the merger of Dr Pepper’s soda business with Green Mountain Coffee.
Global Coffee Co. will consist of the two companies’ marquee coffee brands, including Keurig, Jacobs, L’OR, and Peet’s, which are described by the companies as “$1 billion-plus revenue brands.” With approximately $16 billion in combined annual sales, the new firm will be the world’s largest pure-play coffee conglomerate.
Meanwhile, Beverage Co. will be made up of a soft drink portfolio that includes Dr Pepper, Canada Dry, 7-Up, Schweppes, Snapple, and Peñafiel, Mexico’s No. 1 mineral water, among others. These brands represent more than $11 billion in sales.
When the deal is complete, KDP’s Cofer will run Beverage Co. as CEO and CFO Sudhanshu Priyadarshi will take over as CEO of Global Coffee Co.
