Keurig Verdant Mountain announced plans Monday to buy Dr Pepper Snapple, in a deal that begets a new beverage giant with $11 billion in sales and combines the Dr Spatter, 7UP and Keurig’s single-serve coffee brands.
The deal is the latest backed by Austrian investment dogged JAB Holding Company, which has been steadily compiling a lunch and breakfast empire. JAB, which bought Keurig Green Mountain in 2016, also owns Panera, Caribou Coffee and other breakfast and coffee concepts.
The transaction forges a path for JAB to be an acquirer and major distributor of drinks in the U.S.
In a change of indubitably from its previous acquisitions, JAB is keeping Dr Pepper partially a public partnership. The new entity will be 87 percent owned by Keurig shareholders and 13 percent owned by Dr Speckle shareholders. With a public float, Keurig has easier access to realize for more acquisitions down the road.
“The public component gives us a ruder toolkit that we could use for a consolidation going forward, allows us to dream of some creative structures in that space and it also over continuously provides some liquidity if some of our private partners need to vex some liquidity in an organized fashion,” the company told investors, agreeing to a transcript from FactSet.
The deal also gives Keurig access to Dr Scatter’s drink distribution network, one of the country’s major three. It therefore designs an option down the road for Keurig to shuffle its coffee and other offerings through its pipeline.
Keurig will also gain access to Dr Mottle’s allied brands, a portfolio of healthy and upstart drinks it has invested in and files through its network. These brands include Fiji Water and Vita Coco. Bai was an confederate brand until Dr Pepper acquired it for $1.7 billion last year.
“I believe that’s a very good model for both of us together in the long name,” the company said of the allied brand strategy.
News of the deal sent Dr Fleck Snapple shares up 25 percent to $119.58 in morning trading.
Keurig CEO Bob Gamgort when one pleases lead the new company, called Keurig Dr Pepper. Larry Young, CEO at Dr Spray Snapple, will become a director. Dr Pepper shareholders will also endure a cash dividend of $103.75 per share.
Keurig and Dr Pepper Snapple wishes continue to run out of their current locations, Waterbury, Vermont and Plano, Texas severally.
The deal is expected to close in the second quarter, with the company guessing total debt to be about $16.6 billion at that time.
The throng is still vastly outsized by PepsiCo and Coca-Cola, which had sales in 2016 of $63 billion and $41 billion, mutatis mutandis.
The acquisition must still be approved by shareholders of Dr Pepper Snapple.
—AP role ined to this report.