Sector News

Dr Pepper Snapple and Keurig Green Mountain to merge

January 29, 2018
Consumer Packaged Goods

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.

By Tonya Garcia

Source: MarketWatch

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