Keurig Dr Pepper announced a deal on Monday to purchase JDE Peet’s and separate into two companies focused on coffee and beverages respectively. FIle Photo by Billie Jean Shaw/UPI
Aug. 25 (UPI) — The Keurig Dr Pepper beverage company announced Monday that it will acquire the JDE Peet’s coffee business and then split into two companies.
The deal will see Keurig Dr Pepper buy JDE Peet’s for around $18 billion in cash, bringing all of JDE Peet’s brands into Keurig. Keurig Dr Pepper will then separate into an independent coffee company named “Global Coffee Co.” and a North American refreshment group called “Beverage Co.”
“Today’s announcement marks a transformational moment in the beverage industry, as we build on KDP’s disruptive legacy by creating two winning companies, including a new global coffee champion,” said Keurig Dr Pepper CEO Tim Cofer in the release.
“By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we are poised to generate significant shareholder value in both the near and long term,” he added.
Once separated, the new Beverage Co. will do battle in the North American refreshment beverage market with its more than $11 billion in annual net sales. Cofer will be the CEO of Beverage Co., and Global Coffee will be led by Sudhanshu Priyadarshi, the current Keurig Dr Pepper Chief Financial Officer.
Keurig Dr Pepper, which owns beverage brands such as Snapple, 7Up, Green Mountain Coffee and Dr Pepper, had been coping with slumping coffee sales in the United States, down .2% to about $900 million in the second quarter due to “inflationary pressures” regarding the shipment of its Keurig coffee makers and single-serve coffee pods.
However, the acquisition of JDE Peet’s is expected to pump up Keurig Dr Pepper’s coffee global status, and once the acquisition is completed, the new Global Coffee Co. will be the world’s largest pure-play coffee company, with around $16 billion in combined annual net sales, and will compete in over 100 countries.
“We are excited to join forces with Keurig to chart the future of global coffee by leveraging our combined portfolio of the world’s most beloved coffee brands,” said JDEP CEO Rafa Oliveira in the release.
The separation of Keurig Dr Pepper into two companies is expected to take place “as soon as practicable following the close of the acquisition,” as per the release.