Jan 29, 2018

Keurig agrees to buy Dr Pepper Snapple

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Keurig Green Mountain, controlled by JAB Holdings, has agreed to acquire Dr Pepper Snapple Group in a $21 billion tie-up.

Why it's a big deal: Outside of soon being able to quickly brew a cup of 7-Up Dark Roast? Okay, because this reflects broader trends of beverage industry consolidation and of sugary beverage makers needing to diversify their product offerings. Usually such diversification comes on the buy-side, but selling to a coffee company also works.

DPS shareholders will receive $103.75 per share in a special cash dividend — compared to Friday's $95.65 closing price — and retain a 13% stake in the combined company.

The controlling shareholder will be Europe's JAB Holdings, while Mondelez International will hold upwards of a 14% position. The combined company would generate around $11 billion in pro forma revenue.

Bottom line from Bloomberg:

"The deal vaults JAB into competition with the likes of Coca-Cola Co. and PepsiCo Inc. in soft drinks, moving it beyond fast food and coffee, where the privately held company has acquired Panera Bread, Caribou, Peet’s and other chains."
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