Keurig Dr Pepper Makes $18B Buy

Keurig Dr Pepper is shaking up the beverage landscape with an $18 billion deal to acquire JDE Peet's, the Amsterdam-based owner of Peet's Coffee. The move is set to split Keurig Dr Pepper into two separate publicly traded companies: one that will focus on coffee, and another dedicated to beverages like Dr Pepper, 7UP, Snapple, and a roster of energy drinks, per the Wall Street Journal. Shareholders of JDE Peet's will get around $37 per share—a 33% markup over the company's recent average share price—valuing JDE Peet's at about $15 billion. Keurig Dr Pepper's market cap stands at roughly $50 billion. Once the dust settles, the new coffee company is projected to bring in $16 billion annually, with the beverage side not far behind at $11 billion.

CEO Tim Cofer, who will head the beverage division after the split, calls the acquisition a "bold move" made possible by the company's current financial strength. He touts the deal's attractive price and expects it to quickly boost earnings while shaving $400 million in costs. The current CFO, Sudhanshu Priyadarshi, will take the reins at the new coffee business. While Keurig Dr Pepper's coffee arm, which includes Green Mountain and Keurig, has faced increasing competition and price hikes, recent quarters have shown improvement. The merger with JDE Peet's is expected to expand Keurig's international footprint, pairing its North American base with JDE Peet's presence in Europe and beyond. Meanwhile, Coca-Cola is considering buying up British coffee chain Costa, per Reuters.