Keurig Dr Pepper announced it will acquire European coffee company JDE Peet’s for roughly $18 billion in an all-cash transaction, resulting in the splitting of Keurig Dr Pepper into two separate entities: one focusing on coffee and the other on soft drinks.
Why it matters: This strategic move reflects the ongoing efforts of food and beverage companies to adapt to evolving consumer preferences and market conditions amid challenges in the coffee industry, including surging coffee bean prices, decreasing demand, and increased competition.
The details:
- The new coffee company, with approximately $16 billion in annual sales, will be headquartered in Burlington, Massachusetts, with its international headquarters in Amsterdam.
- The beverage business, expected to generate about $11 billion in annual sales, will be based in Frisco, Texas.
- The deal values JDE Peet’s shares at €31.85 each, about 20% higher than the price before reports of the deal started to circulate.
- JAB Holding Co, the investment firm owned by the German Reimann family, holds nearly 70% of the voting power in JDE Peet’s and also owns about 4% of Keurig Dr Pepper.
What they’re saying:
- “This is the right time for this transaction,” said Tim Cofer, CEO of Keurig Dr Pepper, noting the company’s “operational and financial strength, momentum across our evolved portfolio, and increasing coffee category resilience.”
- Rafa Oliveira, the head of JDE Peet’s, expressed that the agreement signifies “a new era of coffee innovation.”
The other side: Shares in Keurig Dr Pepper fell more than 7% after the deal was announced, amid concerns about a potential shift away from the strategy that created the US drinks giant through the merger of Dr Pepper’s soda business and Green Mountain Coffee.
What’s next: Once established, Global Coffee Co. and Beverage Co. will start operating as two independent entities as soon as practicable, leveraging the distinct markets for soft drinks and coffee.
