Keurig Dr. Pepper (KDP) will be buying Dutch coffee giant JDE Peet in a $18.36 billion deal. The acquisition is expected to give a boost to the US giant company’s declining coffee business in the US. The combined company is expected to give a boost to coffee sales through synergies, although it will function as two separate businesses. JD Peet shares rose by over 17 percent while KDP shares fell by more than 7 percent after the companies announced the deal. This is the biggest European acquisition in the past two years.
The US coffee and soft drinks company will pay €31.85 ($37.26) per share. JD Peet shareholders are expected to gain up to a premium of above 20 percent as per stock price on a 90-day volume-weighted average. JD Peet will also fulfil the 0.36 euros per share dividend that had been declared before the deal was struck.
Keurig Dr Pepper is planning to divide the consolidated business into two separate entities called Beverage Co. and Global Coffee Co. Each public entity will have its own strategy to increase growth and investment while consolidating the combined national and international market share of coffee business across segments.
The joint statement by the company said that the new operations would take place in over 100 countries and that it would offer an “unparalleled” brand portfolio as it would be able to cover different segments and price points of the coffee business.
After the deal goes through Global Coffee Co. is expected to locate its headquarters in Burlington Massachusetts while the international headquarters will be located in Amsterdam, The Netherlands. Beverage Co. will be based in Frisco, Texas.
The new coffee business is expected to give a strong fight to market leader Nestle whose Nescafé brand has dominated global markets with few challengers these past years.
JD Peet’s brands include Douwe Egberts, Maxwell House, Peet’s coffee and others while Keurig Dr Pepper owns 7Up, Dr Pepper, Sunkist, Schweppes, Crush, Snapple and other beverages. Keurig remains the original single-serve brewer and coffee pod manufacturer.
