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Keurig Green Mountain to buy Dr Pepper Snapple in $18.7bn deal

DBR Staff Writer Published 31 January 2018

Keurig Green Mountain has agreed to acquire Dr Pepper Snapple Group in a merger that will create a beverage company with annual sales of $11bn.

Keurig Green Mountain, formerly Green Mountain Coffee Roasters, is a specialty coffee and coffeemaker company established in 1981.

The deal will create Keurig Dr Pepper (KDP), a new beverage company owning brands like Dr Pepper, Snapple, A&W, Mott’s and Sunkist, Orangina, Schweppes, 7UP along with Green Mountain Coffee Roasters and Keurig single-serve coffee brands.

 

It will own more than 75 owned, licensed and partner brands owned by Keurig. KDP will have annual sales revenue of about $11bn.

As per the deal terms, Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend and retain 13% of the combined company.

KDP expects to save $600m in annual synergy by 2021. The companies claimed that the merged company will have ‘unrivaled distribution capability to reach virtually every point-of-sale in North America’.

Keurig Green Mountain, which was acquired by a JAB-led investor group in March 2016, sources, produces, and sells coffee, hot cocoa, teas, and other beverages under several brands.

Dr Pepper Snapple will own 13% stake in KDP. Mondelez International, JAB’s partner in Keurig, will hold own about 13% to 14% stake in the combined company, and JAB will hold the remaining majority stake.

Keurig CEO Bob Gamgort said: “Our view of the industry through the lens of consumer needs, versus traditional manufacturer-defined segments, unlocks the opportunity to combine hot and cold beverages and create a platform to increase exposure to high-growth formats.

“The combination of Dr Pepper Snapple and Keurig will create a new scale beverage company which addresses today’s consumer needs, with a powerful platform of consumer brands and an unparalleled distribution capability to reach virtually every consumer, everywhere.”

Gamgort will serve as the CEO of the new company, while Keurig current chief financial officer Ozan Dokmecioglu will serve as its chief financial officer.

Dr Pepper Snapple president and CEO Larry Young plans to move to a role in KDP’s board of directors and will help the new management team in realizing the full potential of the new company.

Young said: “This transaction will deliver significant and immediate value to our shareholders, along with the opportunity to participate in the long-term upside potential of our combined company and attract new brands and beverage categories to our platform in a fast-changing industry landscape.”


Image: Dr Pepper Snapple Group produces flavored beverages in North America and the Caribbean. Photo: Courtesy of Dr Pepper Snapple Group.