Keurig Dr Pepper is joining the race for a cut of the coffee market. The company announced a monumental acquisition deal on Monday. The agreement involves an $18 billion acquisition of JD Peet’s, a global coffee company. Keurig Dr Pepper’s takeover of the Dutch coffee giant will pitch her against Nestlé in a global coffee market competition.
The $18 billion valuation of the KDP-JDE deal would make it the largest European acquisition in the past two financial years. There are also strong indications that KDP will separate its coffee and beverage concerns after the acquisition is completed. JDE Peet’s shareholders will be walking away with a 20% extra on the closing stock price from Friday. This acquisition will naturally translate to the delisting of JDE Peet’s from the Amsterdam stock exchange. However, it’s going to be good news for the US stock market.
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As a Dutch company, JDE Peet’s could not compete with the likes of Nestlé. This deal, however, is a plausible market strategy in light of President Trump’s recent trade tariffs. However, the coffee giant to materialize after the JDE Peet’s buyout will more than break even in the coffee market. Indeed, KDP’s coffee business will be a global force to reckon with.
Recent hikes in the prices of cash crops like cocoa and coffee, coupled with the cost of importing the raw materials into the United States, have made the beverages quite expensive. For example, coffee beans arriving from Brazil with a 50% added duty.
In a joint press release, it was also explained that the JDE Peet’s buyout will give birth to two business entities: Global Coffee Co. and Beverage Co. In effect, Keurig Dr Pepple will dissolve the 2018 merger that gave birth to it after the final approval of the company’s Board of Directors.
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Keurig Dr Pepper has unbundled the looming leadership vacuum that the JDE Peet’s buyout will cause. According to the joint press release, Tim “Cofer will become CEO of Beverage Co. and Priyadarshi will become CEO of Global Coffee Co.” However, pending the completion of the acquisition’s technicalities, JDE Peet’s current CEO, Rafa Oliviera, will maintain his position.
