By Don Seiffert – Managing Editor, Boston Business Journal
Keurig Dr Pepper, a coffee and beverage giant based in Burlington, says it will pay $18 billion in cash to acquire JDE Peet’s, the parent company of Peet’s Coffee and several others brands of coffee and tea.
KDP (Nasdaq: KDP), the company formed in 2018 from the merger of Keurig Green Mountain Inc. and Dr Pepper Snapple Group Inc., says that after the transaction, it will split into two public companies. One will aim to be “a scaled growth challenger in North America’s attractive refreshment beverages market,” and the other will be “the world’s #1 pure-play coffee company,” the two companies said in a joint statement early Monday morning.
KDP’s stock fell 11.5% Monday after the announcement. The coffee giant’s market capitalization ended the day at about $42.2 billion.
The coffee company will continue to be headquartered in Burlington, and KDP’s CFO, Sudhanshu Priyadarshi, will be the company’s chief executive after the separation. Tim Cofer, the CEO of KDP, will be CEO of the beverage company, which will be based in Plano, Texas. The company expects the separation to be complete by the end of 2026, according to an investor presentation.
The companies said the coffee business will have about $16 billion in combined sales and the beverage business about $11 billion.
KDP was ranked the state’s seventh-largest public company by 2024 revenue, according to the Boston Business Journal research.
The price for Amsterdam-based JDE Peet’s (EURONEXT: JDEP) represents a 33% premium to that company’s 90-day volume-weighted average stock price, the companies said.
KDP’s coffee business has struggled in recent months under the high price of coffee beans. In April, the company said coffee sales fell 3.7% year-over-year, and that coffee made up less than half the revenue, with most of it coming from sales of soda beverages including Dr Pepper, Canada Dry, A&W, Snapple and 7UP.
The company’s said the combination will create “approximately $400 million in anticipated cost synergies to be realized over three years,” but did not say if it plans layoffs or other cost cuts.
“Through the complementary combination of Keurig and JDE Peet’s, we are seizing an exceptional opportunity to create a global coffee giant,” said Cofer in a statement. “This is the right time for this transaction, with KDP in a position of operational and financial strength, momentum across our evolved portfolio, and increasing coffee category resilience.”
Last October, KDP bought a 60% ownership stake in the energy drink company Ghost.