PLANO, TX — Keurig Green Mountain, maker of convenient coffeemakers found in kitchens and company lounges across the country, is buying Plano, Texas-based Dr. Pepper Snapple Group as part of an $18.7 billion deal. The acquisition will create a beverage giant with about $11 billion in yearly sales. The companies, which are both the result of previous mergers, will combine global brands including Dr. Pepper, 7UP, Snapple, A&W, Mott’s, Sunkist and Keurig’s single-serve coffee makers.
Shares of Dr. Pepper Snapple soared more than 39 percent before the opening bell. Keurig, which is a privately held company, said on Monday that Dr. Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend and keep 13 percent of the combined company.
The new company will be known as Keurig Dr. Pepper and will be lead by Keurig CEO Bob Gamgort. Larry Young, CEO at Dr. Pepper Snapple will become a director.
“Our view of the industry through the lens of consumer needs, versus traditional manufacturer-defined segments, unlocks the opportunity to combine hot and cold beverages,” Gamgort said in a statement.
Keurig and Dr. Pepper Snapple will continue to operate out of their current locations. Keurig is based in Waterbury, Vermont and Dr. Pepper Snapple has headquarters in Plano, Texas.
Keurig was acquired by Europe’s JAB Holding company in 2016 in partnership with the snackmaker, Mondelez International. JAB will be the controlling shareholder, and Mondelez will hold a stake of about 13 percent to 14 percent.
“We have been very pleased with our coffee partnership with Keurig, and strongly support the strategic rationale for this transaction,” Dirk Van de Put, CEO of Mondelez, said in a statement.
The deal is expected to close in the second quarter, with the company estimating total debt to be about $16.6 billion at that time.
The acquisition must still be approved by shareholders of Dr. Pepper Snapple Group Inc.
The new company will still vastly outsized by PepsiCo Inc. and Coca-Cola Co., which had sales in 2016 of $63 billion and $41 billion, respectively.
Photo credit: Jim Cole/Associated Press