Keurig Announces Acquisition of Dr Pepper Snapple

  • Published: 25-May-2018

Keurig Green Mountain recently made an announcement of buying Dr Pepper Snapple, an American soft drink company. The deal makes a new soft drink giant with US$ 11 billion in annual trades and combines Keurig’s single-serve coffee brands, 7UP, and Dr Pepper.

A German investment firm,the JAB Holding Company has backed this deal that has been gradually collating breakfast and lunch empire. JAB had acquired Keurig Green Mountain in 2016, also have possession of Caribou Coffee, Panera and several other coffee and breakfast concepts. It has spent the previous 6 years and over $ 30 Bn to buy these companies. This deal establishes a path for JAB to be a key distributor and acquirer of soft drinks in the U. S. This empire has become a largest rival to Nestle, the largest coffee group in the world.

The chairman of JAB Holding, Bart Becht stated that this move of Dr Pepper Snapple has been attributed to rising number of coffee drinkers, particularly by millennials as ready beverages or cold brew. He further stated that they have to gain admittance to circulation capabilities to intercept these segments for become a broad player in the coffee industry.

JAB is retaining Dr Pepper a public companypartially, in a change of course from its previous acquisition. The new unit will be 87% possessed by shareholders of Keurig and 13% possessed by shareholders of Dr Pepper. Keurig has access to cash for more acquisitions down the roadat ease with a public float.

The company told investors that the public component provides them a broader toolkit that they could use consolidation going forward, which helps them think innovative structures in that space and it further delivers liquidity over the time if some of their private partners require to exercise several liquidity in a controlled manner.

This deal further provides Keurig access to drink distribution network of Dr Pepper, one of the economy’s major three. The network therefore makes an opportunityfor Keurigdown the road to reorganize its other products and coffeevia its pipeline.

Keuring is also likely to receive access to allied brands of Dr Pepper, a group of upstart and healthy drinks it has endowed in and distributed via its network. The brands such as Vita Coco and Fiji Water has been included in it. Until Dr Pepper acquired the Bai for $ 1.7 billion previous year, it was allied brand. The company stated on allied brand strategy that this is the best model for both of them together in the long term.

Bob Gamgort, CEO, Keurig is likely to lead the new company dubbed, KeurigDrPepper. Larry Young, CEO at Dr Pepper Snapple, is likely to be director of this new company. Shareholders of Dr Pepper are also likely to get cash dividend of $ 103.75 per share.

Dr Pepper and Keurig are likely to continue to run out their present locations Plano, Texas and Waterbury, Vermont respectively. The deal is anticipated to complete in the 2nd quarter, and the company expecting total debit to be nearly $ 16.6 billion at time. The company is still incredibly outpaced by Coca-Cola and PepsiCo, which had sales in the year 2016 of $ 41 billion and $ 63 billion, respectively. However, the acquisition should still be accepted by shareholders of the Dr Pepper Snapple.

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