Dr Pepper Snapple Group Inc. and Keurig Green Mountain announced plans Monday to merge, creating Keurig Dr Pepper.
Dr Pepper Snapple shareholders will receive $103.75 per share as a special cash dividend and hold on to 13% of the newly merged company. Keurig shareholders will hold the other 87%. Dr Pepper Snapple shares shot up 39% in premarket trading after the announcement.
The combined company would have pro forma revenue of about $11 billion. Keurig Dr Pepper brands would include the namesake Dr Pepper soft drinks, 7 Up, Sunkist and Green Mountain Coffee Roasters, which includes the Keurig single-serve coffee business.
Global investment firm JAB Holding Co. will make a $9 billion equity investment as a part of the transaction financing, and will be the controlling shareholder when the transaction closes. Mondelez International Inc., JAB’s partner in Keurig, is slated to have about a 13% to 14% stake in the merged company.
Mondelez shares are up 0.7% in premarket trading. Keurig Dr Pepper will target $600 million in synergies on an annualized basis by 2021. Keurig went private in 2016. Dr Pepper Snapple shares are up 6.2% over the past year, while the S&P 500 index is up 25.2% for the period.
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