Keurig Dr Pepper will acquire Dutch coffee and tea company JDE Peet’s in a roughly $18 billion deal that could give a boost to the U.S. giant’s struggling coffee business, the two companies said Monday.
The deal was first reported by the Wall Street Journal.
Keurig Dr Pepper will pay JDE Peet’s shareholders 31.85 euros ($37.3) per share in cash, representing a 33% premium on the Dutch’s firm’s 90-day volume-weighted average stock price, which represents a total equity purchase of 15.7 billion euros ($18.4 billion). JDE Peet’s will, meanwhile, pay out a previously declared dividend of 0.36 euros per share prior to the deal closing.
The takeover is expected to generate $400 million in cost synergies over three years.
JDE Peet’s was up 17.18% at 08:30 a.m. London time (03:30 E.T.).
Keurig Dr Pepper, which owns brands such as Dr Pepper, 7Up, Snapple and Green Mountain Coffee, has seen shrinking sales at its U.S. coffee division, down 0.2% to $900 million in the second quarter due to a decline in the shipments of its single-serve coffee pods and Keurig coffee makers.
Keurig Dr Pepper has been looking to raise its appeal with thrifty shoppers who prefer to drink their coffee at home, while also venturing into cold coffee offerings in a bid to attract the Starbucks and Dunkin clientele.
Following the JDE Peet’s acquisition, Keurig Dr Pepper intends to split up its beverage and coffee units as two separate, U.S.-listed companies at the earliest opportunity. Such a step would effectively unwind the 2018 merger between Keurig and Dr Pepper Snapple, which at the time created the third-largest beverage company in North America with roughly $11 billion in annual revenues.
After the division, the resulting coffee company is anticipated to turn $16 billion in combined annual net sales and will be led by current Keurig Dr Pepper Chief Financial Officer Sudhanshu Priyadarshi.
The beverages firm is, meanwhile, expected to have $11 billion in annual net sales and will be helmed, upon separation, by incumbent Keurig Dr Pepper CEO Tim Cofer.
JDE Peet’s CEO, Rafael Oliveira, will stay in his post to helm the Dutch coffee company until the acquisition closes.
— CNBC’s Victor Loh contributed to this report