With an $18 billion acquisition of JDE Peet’s, the U.S. soft drink giant Keurig Dr Pepper is poised to establish a worldwide coffee powerhouse to compete with market leader Nestle.
This is Europe’s largest acquisition in over two years.
As the Dutch company would be delisted from the Amsterdam Stock Exchange, the deal, announced on Monday and offering a 20% premium to JDE Peet’s closing market price on Friday, would split the combined entity’s coffee operations and other beverage businesses into two distinct publicly listed U.S. companies.
This summer, Trump levied a 50% duty on the majority of imports from Brazil, the world’s top producer of coffee, because of its probe of its former president, Trump friend Jair Bolsonaro.
However, Keurig Dr Pepper believes that both coffee and cold beverages are expanding markets that are better suited for independently run businesses.
Tim Cofer, the CEO, described it as a “transformational moment” for the industry.
In prepared remarks, Cofer states, “We are poised to generate significant shareholder value in the near and long term by creating two beverage companies that are sharply focused and have attractive and tailored growth propositions and capital allocation strategies.”
However, big companies like Starbucks are having trouble.
The Seattle coffee giant’s shares have dropped 23% since early March, and same-store sales, a crucial indicator of a retailer’s health, have declined for six consecutive quarters.
Higher prices are being used by Dr Pepper Keurig to counteract some decreases.
The corporation recorded a 0.2% drop in coffee sales in its most recent quarter.
According to the firms, Keurig Dr Pepper’s beverage company will generate approximately $11 billion in sales, while the soon-to-be-separated coffee industry will generate approximately $16 billion.
Over the course of three years, the companies anticipate saving roughly $400 million as a result of the combination.
