Keurig Dr Pepper will acquire Dutch coffee group JDE Peet's in a deal worth €15.7 billion ($18.4 billion) and split into two publicly listed businesses, the companies announced Monday. The transaction marks a major shift for the U.S. beverage giant as it seeks to strengthen its coffee business and separate operations into distinct units.
The Dr Pepper and 7Up owner will pay JDE Peet's shareholders €31.85 ($37.26) per share in cash, a 33% premium on the firm's 90-day volume-weighted average price. The agreement also allows JDE Peet's to pay a previously declared dividend of €0.36 per share before closing. Shares in JDE Peet's surged more than 17% Monday morning in London following the news.
Upon completion, Keurig Dr Pepper will separate into two entities: Beverage Co., focused on soft drinks and other beverages, and Global Coffee Co., a pure-play coffee company projected to generate $16 billion in annual sales. Keurig Dr Pepper CEO Tim Cofer will lead Beverage Co., while the company's chief financial officer, Sudhanshu Priyadarshi, will head Global Coffee Co.
"This is the right time for this transaction," Cofer said in the joint statement. He pointed to the company's "operational and financial strength, momentum across our evolved portfolio and increasing coffee category resilience" as reasons to move ahead.
The new Global Coffee Co. will sell brands such as Douwe Egberts, Kenco, and Peet's Coffee in more than 100 markets. The move positions the spinoff as the largest standalone coffee company worldwide. JDE Peet's CEO Rafael Oliveira will continue leading the Dutch firm until the acquisition closes.
For Keurig Dr Pepper, the deal comes as its U.S. coffee division has struggled, with sales dipping 0.2% to $900 million in the second quarter due to declines in single-serve pod and brewer shipments. The acquisition and spinoff are expected to generate about $400 million in cost synergies over three years.
Keurig Dr Pepper, created in 2018 from the merger of Keurig Green Mountain and Dr Pepper Snapple, had $11 billion in annual revenues at the time of its formation. The planned separation will effectively unwind that merger, giving investors two focused businesses-one centered on soft drinks, the other on coffee.
