Dr Pepper Snapple & Keurig Green Mountain to Merge

Keurig Green Mountain, Inc (Burlington, Massachusetts) and Dr Pepper Snapple Group, Inc (Plano, Texas) announced yesterday – 29 January – that the companies are merging to create Keurig Dr Pepper (“KDP”), a new beverage company of scale with a portfolio of iconic consumer brands and expanded distribution capability to reach virtually every point-of-sale in North America. Under the terms of the agreement, Dr Pepper Snapple shareholders will receive USD $103.75 per share in a special cash dividend and retain 13% of the combined company.

KDP will have pro forma combined 2017 annual revenues of approximately USD $11 billion. This combination joins together beloved brands such as Dr Pepper, 7UP, Snapple, A&W, Mott’s and Sunkist with leading coffee brand Green Mountain Coffee Roasters and the Keurig single-serve coffee system, as well as more than 75 owned, licensed and partner brands in the Keurig system.

Commenting on the merger, Bob Gamgort, CEO of Keurig Green Mountain (KGM), says, “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 and create a platform to increase exposure to high-growth formats. The combination of Dr Pepper Snapple and Keurig will create a new scale beverage company which addresses today’s consumer needs, with a powerful platform of consumer brands and an unparalleled distribution capability to reach virtually every consumer, everywhere.”

Following the merger announcement, KGM stated that the merger will not change the company’s commitment to single-serve and coffee. “We will remain passionately focused on expanding and innovating within the coffee category, and growing our installed base of Keurig brewers in homes and offices. Merging with Dr Pepper Snapple Group will add the ability to bring our products and brands to more consumers even faster,” per the release.

The transaction is expected to close in the second calendar quarter of 2018. Once the transaction closes Keurig Dr Pepper will be a publicly traded company (KDP) with JAB Holding Company as its controlling shareholder. In the meantime, they will continue to operate as two separate companies.

Bob Gamgort, current chief executive officer of Keurig, will serve as CEO of the combined company and Ozan Dokmecioglu, current chief financial officer of Keurig, will serve as KDP’s CFO. Dr Pepper Snapple president and CEO Larry Young intends to transition to a role on KDP’s board of directors. Bart Becht, current partner and chairman of JAB Holding Company and chairman of Keurig, will serve as chairman of the new company’s board of directors, and Bob Gamgort will become an executive member of the board.

Keurig and Dr Pepper Snapple will continue to operate out of their current locations and Bob Gamgort, CEO of the new company, will be based in Burlington, Mass. The combined company will draw on the leadership teams of both companies, who will continue running their respective businesses.

“We are very excited about the prospect of KDP becoming a challenger in the beverage industry,” says Becht. “Management’s proven operational and integration track record along with their commitment to innovation and potential future brand consolidation opportunities, while maintaining an investment grade rating, positions the company well for long-term success and material shareholder value creation.”

For more information, visit the company’s website at: http://www.jabholco.com.

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