Keurig Dr Pepper (KDP -11.34%), a beverage conglomerate built on acquisitions, announced its latest purchase on Monday -- and investors weren't too happy to hear the news. Assertively trading out of the company's stock, they left it with an over 11% loss on the day. By comparison, the S&P 500 index did well with its 0.4% decrease.
Brewing up a new coffee giant
That morning, KDP announced it had entered into a definitive agreement to buy Netherlands-listed coffee company JDE Peet's. Stockholders of the latter, perhaps best known to Americans as the company behind Peet's cafes, will received 31.85 euros ($37.33) per share in the deal, which works out to a total price tag of 15.7 billion euros ($18.4 billion).
Image source: Getty Images.
That per-share figure represents a 33% premium to the shares' 90-day, volume-weighted average price, the acquirer said.
After the close of the transaction, KDP added, the company will divide into two businesses. One will be centered on its soft drinks, and the other will be what management claims is to be "the world's No. 1 pure-play coffee company." It has not provided the future name for either.
In the press release trumpeting the deal, KDP quoted its CEO Tim Cofer as saying that "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."
The company said it expects the acquisition to close in the first half of 2026. The separation of the current KDP into two entities is to occur "as soon as practicable" after this, the company said.
That's one big loan
To finance the acquisition, KDP said it entered into a definitive bridge loan agreement with affiliates of investment bank Morgan Stanley and Mitsubishi UFJ Financial Group. The company did not provide details of this financing but did say it would cover 100% of the purchase.
