Following the purchase, Keurig Dr Pepper (KDP) will divide into two US-listed publicly traded companies – a refreshment beverage company and a coffee company.
Upon separation, KDP’s CEO Tim Cofer will become the CEO of ‘Beverage Co.’ geared towards the North American market. Meanwhile, current CFO Sudhanshu Priyadarshi will be appointed as CEO of ‘Global Coffee Co.’, with its sights set on becoming a global coffee leader.
Each company will be positioned ‘to win’ with focused strategies and ‘attractive’ growth models, powered by iconic brands such as Schweppes and Kenco, alongside tailored capital allocation priorities, backed by strong cash flows.
Under the terms of the transaction, KDP will pay JDE Peet’s shareholders €31.85 per share in cash, a 33% premium to JDE Peet’s 90-day volume-weighted average stock price, representing a total equity consideration of €15.7 billion (£11.7bn).
JDE Peet’s will also pay a previously declared dividend of €0.36 per share prior to closing, with no reduction to the offer price.
The acquisition of JDE Peet’s will significantly enhance KDP’s coffee positioning, creating a strong, resilient and diversified global portfolio. It will also unlock ‘incremental operating and financial benefits’, including approximately $400 million in anticipated cost synergies to be realised over three years and EPS accretion expected to start in year one of the combination.
The strategy behind the separation
Upon separation, Global Coffee Co., with approximately $16 billion in combined annual net sales, will be the world’s largest pure-play coffee company, operating within 100 countries, including 40 in which the company holds the number one or two market position by sales.
Beverage Co., with more than $11 billion in annual net sales, will be positioned as a scaled challenger in the $300 billion North American refreshment beverage market. With a portfolio of iconic and emerging brands, a differentiated and expanding Direct-Store-Delivery (DSD) system, and a proven, capital-efficient growth model, it will benefit from multiple drivers in this competitive, fragmented market. Strong free cash flow will support a ‘dynamic approach’ to capital allocation and enhance optionality.
‘A transformational moment’ for drinks
“Today’s announcement marks a transformational moment in the beverage industry, as we build on KDP’s disruptive legacy by creating two winning companies, including a new global coffee champion,” said Cofer.
“Through the complementary combination of Keurig and JDE Peet’s, we are seizing an exceptional opportunity to create a global coffee giant. 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. By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we are poised to generate significant shareholder value in both the near and long term.”
“We are excited to join forces with Keurig to chart the future of global coffee by leveraging our combined portfolio of the world’s most beloved coffee brands,” added Rafa Oliveira, CEO at JDE Peet’s.
“This highly complementary transaction will deliver an attractive premium for our shareholders and will create compelling future growth opportunities for our employees, customers and other stakeholders. We are incredibly proud of the formidable global platform that we have built at JDE Peet’s and, together with Keurig, we are looking forward to powering a new era of coffee innovation and leadership, building on JDE Peet’s recently announced ‘Reignite the Amazing’ strategy.”
