A new coffee giant is on the horizon as Keurig Dr. Pepper, an American beverage powerhouse, announces plans to acquire JDE Peet's, the European parent company of California's renowned Peet's Coffee. This all-cash transaction is valued at approximately $18 billion, marking a significant shift in the global coffee landscape.
In a strategic move, Keurig Dr. Pepper will be restructured into two independent entities following the acquisition. The coffee-focused company will be named Global Coffee Co. and will be publicly traded in the United States. The other entity, Beverage Co., will also be publicly listed, allowing both companies to capitalize on their respective markets. According to the company’s announcement, Global Coffee Co. is projected to generate approximately $16 billion in annual sales, while Beverage Co. is expected to exceed $11 billion in annual net sales.
Tim Cofer, the Chief Executive of Keurig Dr. Pepper, described the acquisition as a "transformational moment in the beverage industry." He emphasized that the complementary nature of Keurig and JDE Peet's provides a unique opportunity to create a global coffee giant. The acquisition is set to enhance their market presence and product offerings significantly.
Under the terms of the deal, Keurig Dr. Pepper will compensate JDE Peet's shareholders with 31.85 euros per share in cash, which is roughly equivalent to $37 per share. This offer represents a 33% premium over JDE Peet's 90-day volume-weighted average stock price, leading to a surge of over 15% in JDE Peet’s shares after the announcement. Conversely, shares of Keurig Dr. Pepper experienced a decline of more than 10%.
According to JDE Peet's recent half-year report released in July, the company saw an impressive sales growth of over 19% in the past year. In addition to Peet's Coffee, JDE Peet's manages several popular brands, including Stumptown Coffee Roasters and the German coffee brand Jacobs. Peet's Coffee has established itself as a premier destination for coffee lovers, particularly in San Francisco, where it played a pivotal role in introducing dark, gourmet coffee to American consumers.
Founded by Alfred Peet in 1966, Peet's Coffee began in the Bay Area near UC Berkeley. Peet, who was influenced by his experience in his father's small coffee business in the Netherlands, famously questioned, "I came to the richest country in the world, so why are they drinking the lousiest coffee?" His legacy includes training three young entrepreneurs, who later opened the first Starbucks store. Today, there are more than 220 Peet's Coffee locations in California and over 40 in other states.
Once the acquisition is finalized, Global Coffee Co. will boast the most extensive coffee portfolio in the world, including brands generating over $1 billion in revenue, such as Keurig, Jacobs, L’OR, and Peet's. This transformative acquisition will also dissolve the merger between Keurig and Dr. Pepper that was completed in 2018.
Rafa Oliveira, Chief Executive of JDE Peet's, expressed enthusiasm about the merger, stating, "We are 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."
