Dr Pepper Snapple to Merge With Keurig Green Mountain

01/29/18 08:21 AM EST
By Cara Lombardo 

Dr Pepper Snapple Inc. will merge with Keurig Green Mountain Inc. to merge to create a new beverage company with about $11 billion of combined revenue, the drink companies said Monday.

The deal brings Dr Pepper brands such as 7UP, A&W root beer and Bai under the same roof as Keurig's single-serve coffee systems and 75 other Keurig-related brands including The Original Donut Shop coffee and Green Mountain Coffee Roasters.

Under the terms of the deal, Dr Pepper Snapple shareholders will receive a special cash dividend of $103.75 a share and retain 13% of the combined company. Dr Pepper shares, which closed at $95.65 on Friday, rose 35% in premarket trading Monday.

Keurig was taken private in 2016 following its acquisition by a group of investors led by European investment fund JAB Holding Co. JAB says about 20% of U.S. households use Keurig systems.

The deal would make JAB will become the controlling shareholder in the combined company, Keurig Dr Pepper. Snack giant Mondelez International Inc., JAB's partner in Keurig, will hold a roughly 13% to 14% stake in the firm.

Dr Pepper Snapple Chief Executive Larry Young said in prepared remarks that the deal will allow the companies to react to a fast-changing industry landscape with hot and cold beverages that will satisfy every consumer throughout the day.

Soda giants including Dr Pepper Snapple, PepsiCo Inc. and Coca-Cola Co. have been racing to expand their portfolios of healthier-seeming drinks such as ready-to-drink coffees and teas, which have been some of the fastest-growing beverage categories in recent years.

Dirk Van de Put, CEO of Mondelez International, called the new company a "powerful beverage platform."

The deal, expected to close in the second quarter of this year, is subject to the approval of Dr Pepper Snapple shareholders and other closing conditions.

Write to Cara Lombardo at cara.lombardo@wsj.com


(END) Dow Jones Newswires

January 29, 2018 08:21 ET (13:21 GMT)

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