Keurig to buy Dr Pepper Snapple, creating a beverage giant
Keurig Green Mountain said it is buying Dr Pepper Snapple (DPS), creating a company with dozens of iconic brands such as A&W and Green Mountain Coffee Roasters.
The new company will be called Keurig Dr Pepper. Keurig shareholders will own 87 percent of the new business, while Keurig chief executive Bob Gamgort will continue as CEO of the combined company. Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend and own 13 percent of the combined company, according to a statement issued by the companies.
The acquisition unites two beverage companies that have already gone through several mergers. Keurig Green Mountain, which formed when Green Mountain Coffee Roasters bought the coffee brewing-machine maker Keurig, has cut staff amid tougher competition from coffee rivals. Soda companies, meanwhile, have been under pressure amid concerns about the health impacts of sugary drinks.
The deal "unlocks the opportunity to combine hot and cold beverages and create a platform to increase exposure to high-growth formats," Gamgort said in a statement.
The new company will have combined pro forma revenue of about $11 billion in 2017.
JAB Holding Company, which took Keurig Green Mountain private when it bought the coffee company in 2016, said it and its partners will invest about $9 billion into the new company. JAB will be the controlling shareholder of the new business after the deal closes, while Mondelēz International will own about 13 to 14 percent.
JAB Holding Chairman Bart Becht said the merger will allow the new business to be a "a challenger in the beverage industry."
