Keurig Green Mountain announced plans Monday to buy Dr Pepper Snapple, in a deal of which creates a completely new beverage giant with $11 billion in sales along with combines the Dr Pepper, 7UP along with Keurig’s single-serve coffee brands.
The deal will be the latest backed by Austrian investment firm JAB Holding Company, which has been steadily compiling a lunch along with breakfast empire. JAB, which acquired Keurig Green Mountain in 2016, also owns Panera, Caribou Coffee along with different breakfast along with coffee concepts.
The deal forges a path for JAB to be an acquirer along with major distributor of drinks inside the U.S.
In a change of course coming from its previous acquisitions, JAB will be keeping Dr Pepper partially a public company. The completely new entity will be 87 percent owned by Keurig shareholders along with 13 percent owned by Dr Pepper shareholders. that has a public float, Keurig has easier access to cash for more acquisitions down the road.
“The public component gives us a broader toolkit of which we could use for a consolidation going forward, allows us to think of some creative structures in of which space along with of which also over time provides some liquidity if some of our private partners need to exercise some liquidity in an organized fashion,” the company told investors, according to a transcript coming from FactSet.
The deal also gives Keurig access to Dr Pepper’s drink distribution network, one of the country’s major three. of which therefore creates an option down the road for Keurig to shuffle its coffee along with different products through its pipeline.
Keurig will also gain access to Dr Pepper’s allied brands, a portfolio of healthy along with upstart drinks of which has invested in along with distributes through its network. These brands include Fiji Water along with Vita Coco. Bai was an allied brand until Dr Pepper acquired of which for $1.7 billion last year.
“I think of which’s a very not bad design for both of us together inside the long term,” the company said of the allied brand strategy.
News of the deal sent Dr Pepper Snapple shares up 25 percent to $119.58 in morning trading.
Keurig CEO Bob Gamgort will lead the completely new company, called Keurig Dr Pepper. Larry Young, CEO at Dr Pepper Snapple, will become a director. Dr Pepper shareholders will also receive a cash dividend of $103.75 per share.
Keurig along with Dr Pepper Snapple will continue to run out of their current locations, Waterbury, Vermont along with Plano, Texas respectively.
The deal will be likely to close inside the second quarter, with the company estimating total debt to be about $16.6 billion at of which time.
The company will be still vastly outsized by PepsiCo along with Coca-Cola, which had sales in 2016 of $63 billion along with $41 billion, respectively.
The acquisition must still be approved by shareholders of Dr Pepper Snapple.
—AP contributed to This specific report.