Coffee maker Keurig Green Mountain Inc. is to buy soda giant Dr. Pepper Snapple Group Inc (NYSE:DPS) for about US$18.7bn.
Snapple shareholders will receive a special cash dividend of US$103.75 per share and will own 13% of the enlarged company.
New company to be called Keurig Dr. Pepper
The billionaire Reimann family’s JAB Holding Co. will be the controlling shareholder and Mondelez International Inc. (NASDAQ:MDLZ) will hold a stake of about 13% to 14%.
Keurig was acquired by JAB in 2016 in partnership with Mondelez.
The newly merged company will be called Keurig Dr. Pepper and will have proforma 2017 revenue of about US$11bn.
It will bring together Snapple brands Dr. Pepper, 7UP, A&W and Sunkist with Keurig’s leading coffee brand Green Mountain Coffee Roasters.
Bob Gamgort, the chief executive of Keurig, said the deal “unlocks the opportunity to combine hot and cold beverages and create a platform to increase exposure to high-growth formats”.
The deal moves JAB beyond coffee and into competition with fizzy drinks companies such as PepsiCo Inc. (NASDAQ:PEP) and The Coca-Cola Co. (NYSE:KO).
The merger is expected to close in the second quarter, subject to shareholder approval.