Keurig Dr Pepper's $18B JDE Peet's Acquisition Means Big Changes for Frisco HQ

Frisco-based Keurig Dr Pepper (Nasdaq: KDP) is acquiring Netherlands-based JDE Peet’s (EURONEXT: JDEP) in an $18 billion all-cash deal. The resulting shakeout will take that “Keurig” off the signage at KDP’s Frisco headquarters—making North Texas once again the home of a standalone beverage company led by Dr Pepper along with Canada Dry, 7UP, A&W, and more.

It’s the latest move in the saga of Dr Pepper, which was founded in Waco in 1885 and which for many years had its headquarters at E. Mockingbird Lane and Greenville Avenue in Dallas—where a 10-2-4 logo and “Dr Pepper Station” sign remains to this day.

When the deal closes, KDP plans to separate into “two independent, U.S.-listed publicly traded companies”: a Frisco-based “refreshment beverages” leader and the world’s largest pure-play coffee company, which have a global HQ in Burlington, Massachusetts, and international headquarters in Amsterdam, the Netherlands.

Under the deal, KDP will pay JDE Peet’s shareholders €31.85 per share in cash, a 33% premium to JDE Peet’s 90-day volume-weighted average stock price, for a total of €15.7 billion. JDE Peet’s will also pay a previously declared dividend of €0.36 per share prior to closing, with no reduction to the offer price.

“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,” KDP CEO Tim Cofer said in a statement. “Through the complementary combination of Keurig and JDE Peet’s, we’re seizing an exceptional opportunity to create a global coffee giant.”

“This is the right time for this transaction, with KDP in a position of operational and financial strength, momentum across our evolved portfolio, and increasing coffee category resilience,” Cofer added. “By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we’re poised to generate significant shareholder value in both the near and long term.”

Resulting in two focused, scaled companies

The deal will result in “two strategically focused, scaled beverage companies with differentiated shareholder value propositions, featuring distinct growth and capital allocation frameworks designed to deliver sustained and compelling long-term value,” the companies said.

When the split occurs, the North Texas-based “Beverage Co.”—a placeholder name for now—will have more than $11 billion in annual net sales as America’s flavored carbonated soft drink portfolio, Led by the $5 billion-plus Dr Pepper brand and the $1 billion-plus Canada Dry brand, it also features 7UP, A&W, and more than $3 billion in high-growth categories including energy and functional beverages.

The Frisco-based beverage giant “will benefit from multiple drivers to continue to win in its vast and fragmented industry,” KDP said.

The deal’s resulting “Global Coffee Co.”—again, final brand naming hasn’t been announced—will have around $16 billion in combined annual net sales, making it the world’s leading pure-play coffee company, including $1 billion-plus revenue brands Keurig, Jacobs, L’OR and Peet’s. Its reach will extend across more than 100 countries, including 40 in which the company holds the #1 or #2 market position by sales.

Coffee is one of the most consumed beverages globally, KDP noted, representing a $400 billion category with rapid growth in emerging markets, and the combined coffee business aims to “lead the next generation of coffee innovation worldwide.”

‘A new era of coffee innovation’

JDE Peet’s CEO Rafael Oliveira

JDE Peet’s CEO Rafa Oliveira said his company is “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.”

“This highly complementary transaction will deliver an attractive premium for our shareholders and will create compelling future growth opportunities for our employees, customers and other stakeholders,” Oliveira added. “We’re incredibly proud of the formidable global platform that we have built at JDE Peet’s and, together with Keurig, we are looking forward to powering a new era of coffee innovation and leadership, building on JDE Peet’s recently announced ‘Reignite the Amazing’ strategy.”

On the deal’s close and until the planned separation is complete, the combined company will be led by KDP’s management team, including CEO Tim Cofer and CFO Sudhanshu Priyadarshi, the companies said.

Once the separation occurs, Cofer will become CEO of Beverage Co. and Priyadarshi will become CEO of Global Coffee Co. Rafa Oliveira will continue to serve as CEO of JDE Peet’s until the deal’s close. Additional members of leadership and boards of directors for both companies will be announced at a later date, the companies said.