What: Shares of Keurig Green Mountain (GMCR.DL) were up 73.5% as of 11:00 a.m. EST Monday after the specialty coffee company agreed to be acquired by JAB Holding Company for $92 per share in cash.
So what: That equates to a $13.9 billion total equity value for Green Mountain, and an enormous 77.9% premium over Friday's closing price. JAB, for its part, says it is partnering with other strategic minority investors who are already shareholders in tea and coffee giant Jacobs Douwe Egberts B.V., including Mondelez International and "entities affiliated with BDT Capital Partners."
For perspective, however, shares of Keurig Green Mountain are still down more than 30% so far this year, and JAB's acquisition price represents a roughly 40% discount from the stock's all-time high above $150 per share set just over a year ago. For that, investors can largely thank Keurig's contracting revenue and margins since then, driven in part by disappointing initial showings from both its new Keurig Kold and Keurig 2.0 platforms.
Now what: The transaction is expected to close in the first calendar quarter of 2016, at which time Keurig Green Mountain will become a privately owned company.
But the acquisition is also still subject to regulatory approvals, and requires the approval of a majority of Keurig Green Mountain shareholders to proceed. With shares currently trading only a few dollars below the proposed acquisition price -- and unless investors are holding to take advantage of lower long-term capital gains taxes -- I think Keurig Green Mountain shareholders would be wise to take today's profits and put them to work elsewhere.
