Please ensure Javascript is enabled for purposes of website accessibility

Why Green Mountain Coffee Roasters Shares Soared

By Jeremy Bowman – Feb 6, 2014 at 3:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Green Mountain shares shot up after announcing a surprise deal with Coca-Cola. Here's what you need to know:

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.

What: Shares of Green Mountain Coffee Roasters (GMCR.DL) were on fire today, climbing as much as 37% after the Keurig maker announced a surprise deal with Coca-Cola (KO -2.58%) last night.

So what: Coke will take a 10% stake in the Vermont-based coffee seller, and the two formed a 10-year "global strategic partnership," which will make Coke's brand portfolio available for the soon-to-come Keurig Cold at-home soda-maker. Coke will also put the full weight of its marketing power behind the new product in an attempt to "bring the Keurig Cold beverage system to consumers around the world." The beverage giant invested a total $1.25 billion in Green Mountain at a per-share price of $74.98.

Now what: The partnership is a huge development for Green Mountain and the countertop soda-making industry. For years, Coca-Cola and other major brands have avoided licensing their products the likes of companies like SodaStream, which has been growing sales above 20% for several years, but that changed immediately with last night's announcement. The deal may also signify a transition in Green Mountain from a hot beverage seller to a cold one as sales have essentially flatlined after years of torrid growth. Still, the Keurig Cold is not set to hit the market until 2015, so investors will have to wait a while to see if the new partnership will make a splash.

Jeremy Bowman owns shares of SodaStream. The Motley Fool recommends Green Mountain Coffee Roasters. It recommends and owns shares of Coca-Cola and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Coca-Cola Company Stock Quote
The Coca-Cola Company
$56.38 (-2.58%) $-1.49
Keurig Green Mountain, Inc. Stock Quote
Keurig Green Mountain, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.