Keurig Dr Pepper Stock Slides After $18B JDE Peet’s Deal
Shares of Keurig Dr Pepper (KDP) fell sharply in premarket trading Monday. The drop followed a major announcement from the beverage giant. The company plans to acquire Dutch coffee firm JDE Peet’s for $18.4 billion. It will then split its entire business into two separate companies.
Details of the Mega-Deal
Keurig Dr Pepper will pay €15.7 billion in cash for JDE Peet’s. This price represents a significant 33% premium over the Dutch company’s recent average stock price. Following the news, KDP shares were down more than 3%. In contrast, JDE Peet’s stock surged over 17% in European trading. The deal is expected to create $400 million in cost savings over three years.
A Major Corporate Reorganization
The acquisition is part of a much larger strategic shift. After the deal closes, KDP will separate into two independent, U.S.-listed companies. This move effectively unwinds the 2018 merger of Keurig and Dr Pepper.
- Global Coffee Co. will combine KDP’s current coffee business with JDE Peet’s. It is projected to have $16 billion in annual sales. KDP’s current CFO, Sudhanshu Priyadarshi, will lead this new company.
- Beverage Co. will consist of the remaining soft drink brands like Dr Pepper, 7Up, and Snapple. Current KDP CEO Tim Cofer will remain to lead the beverage firm.
The Strategy Behind the Acquisition
This move aims to boost KDP’s struggling U.S. coffee division. The company has seen sales of its Keurig coffee makers and K-Cup pods decline. Buying JDE Peet’s, a global powerhouse, instantly transforms KDP’s coffee operations. The split will allow each new company to focus more directly on its specific market. Investors are reacting to the high cost of the deal in the short term. The long-term success will depend on the performance of the two new, more focused firms.