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Keurig Dr. Pepper and Peet’s Coffee are teaming up—just to split into two different companies.
Today, beverage behemoth Keurig Dr. Pepper announced it is acquiring Amsterdam-based JDE Peet’s in an $18 billion cash deal. Keurig Dr. Pepper will pay JD Peet’s investors $37.50 per share, a 33% premium on Peet’s three-month weighted average stock price.
Shares of Keurig Dr. Pepper fell 11.48% on the news, while JDE Peet’s surged 22.81%.
The Peet’s deets: As part of the two-step transaction, which is expected to close in 2026, the new entity plans to separate into two distinct public companies: Beverage Co., which will focus on brands like Dr Pepper, 7UP, and Snapple; and Global Coffee Co., featuring Peet’s, Green Mountain, and Keurig.
Post-split, Keurig Dr Pepper’s CEO Tim Cofer will lead the new beverage company, which is expected to bring in $11 billion in net sales. Keurig Dr Pepper CFO Sudhanshu Priyadarshi will lead the new coffee company, which is expected to enjoy $16 billion in annual net sales.
Caffeine crash
Getting together then separating may seem like a counterintuitive business maneuver, but there’s a method to the madness.
Keurig and Dr. Pepper originally joined forces in 2018, but the company’s coffee division has been weighing it down for years, underperforming its soft drink sales. Part of the reason has to do with steep competition in the coffee market, exacerbated by the surging price of coffee beans over the past year—and that was before 50% tariffs were slapped on Brazil, which produces much of the world’s coffee beans.
Not only would JDE Peet’s give the company an entry into the European market, it would also allow it to focus on stealing customers from chains like Starbucks.
As for the beverage company, the streamlined entity will hopefully curtail a slowdown in soft drink sales fueled by health-conscious customers. Analysts expect it to focus on energy drink offerings like Ghost and Bloom.
"Following the separation, each stand-alone entity will lead its industry with a sharp strategic focus and with operating models that are finely calibrated to their unique categories and markets," Cofer said.—LB