A new coffee giant could be brewing.
The American beverage firm Keurig Dr. Pepper plans to buy JDE Peet’s, the European parent company of California’s gourmet coffee trailblazer, Peet’s Coffee, in an all-cash transaction worth about $18 billion.
Keurig Dr. Pepper will be split into two independent companies, one of which will focus on coffee, according to a Monday release.
The new coffee company will be called Global Coffee Co. and will be publicly traded in the U.S., as will the beverage company, which will be called Beverage Co. Global Coffee Co. will have approximately $16 billion in combined annual sales and Beverage Co. will have more than $11 billion in annual net sales, the release said.
“Today’s announcement marks a transformational moment in the beverage industry,” said Keurig Dr. Pepper Chief Executive Tim Cofer in a statement. “Through the complementary combination of Keurig and JDE Peet’s, we are seizing an exceptional opportunity to create a global coffee giant.”
Under the terms of the deal, Keurig Dr. Pepper will pay JDE Peet’s shareholders 31.85 euros per share in cash, equivalent to about $37 per share. The value is a 33% premium to JDE Peet’s 90-day volume-weighted average stock price.
After the deal was announced, JDE Peet’s shares climbed more than 15%. Keurig Dr. Pepper shares fell more than 10%.
According to JDE Peet’s half-year report released in July, sales for the company grew more than 19% over the past year.
Along with Peet’s Coffee, JDE Peet’s owns popular brands including Stumptown Coffee Roasters and German coffee name Jacobs. Peet’s Coffee has made a name for itself as a San Francisco-based destination that helped bring dark, gourmet coffee to American consumers.
After working at his father’s small coffee company in the Netherlands, Alfred Peet moved to the U.S. and in 1966 opened the first Peet’s Coffee shop in the Bay Area, near UC Berkeley.
“I came to the richest country in the world, so why are they drinking the lousiest coffee?” Peet used to say, according to the Peet’s Coffee website.
By 1971, Peet was training three young entrepreneurs and provided them with the roasted beans to open their new venture, Starbucks. There are now more than 220 Peet’s Coffee shops in California and more than 40 in other states.
After the acquisition closes, Global Coffee Co. will have the world’s most expansive coffee portfolio, the release said, including $1-billion-plus revenue brands Keurig, Jacobs, L’OR and Peet’s. The acquisition and split into two companies will unwind the merger between Keurig and Dr. Pepper that closed in 2018.
“We are excited to join forces with Keurig to chart the future of global coffee by leveraging our combined portfolio of the world’s most beloved coffee brands,” said JDE Peet’s Chief Executive Rafa Oliveira in a statement.
