Keurig Dr Pepper Inc (NASDAQ:KDP) announced it has agreed to acquire Dutch coffee and tea company JDE Peet’s in an all-cash deal valued at about $18 billion.
The pending takeover is expected to perk up Keurig’s sluggish coffee business. Sales at Keurig’s US coffee division slipped 0.2% in the second quarter to $900 million, which the company attributed to a fall in shipments of its single-serve coffee pods and Keurig coffee makers.
JDE Peet shareholders will receive €31.85, or $37.30 per share, in cash for each JDE Peet share held.
Keurig Dr Pepper said it will split up its beverage and coffee units as two separate, US-listed companies following the JDE Peet’s acquisition.
The US beverage giant noted that the acquisition is expected to generate $400 million in cost synergies over three years.
The coffee unit is anticipated to generate about $16 billion in combined annual net sales, which would make it the world's largest pure-play coffee provider, according to the company.
Current Keurig Dr Pepper Chief Financial Officer Sudhanshu Priyadarshi will head the new coffee unit.
Keurig Dr Pepper owns well-known brands such as Dr Pepper, 7Up, and Snapple.
Shares of Keurig slid about 8% in early Monday trading.