Keurig-JAB Holdings Merger Receives Shareholders' Approval

Keurig Green Mountain Inc. GMCR received approval from its shareholders for the proposed merger with JAB Holdings. At the time of the merger, Keurig shareholders of will receive $92.00 in cash for each share.

KeurigGreen Mountain entered into a deal to be acquired by an investor group led by Germany's JAB Holdings for $Array3.9 billion or $92 a share on Dec 8, 20Array5. JAB is a private investment firm which owns majority stakes in other coffee companies like Jacobs Douwe Egberts ("JDE"), Peet's Coffee & Tea, and Caribou Coffee. The group also includes Mondelez International, Inc. MDLZ and affiliates of BDT Capital Partners.

Following the closure of the deal, which is expected in the first quarter of 20Array6, Keurig Green Mountain will continue to operate independently as a privately owned entity.

The Coca-Cola Company KO, with around Array7% stake in the specialty coffee retailer, reportedly stands to make a profit of about $25.5 million if the merger gets through. Prior to the announcement, this stake was reportedly worth a loss of approximately $Array billion.

The shareholder approval seems to be a good decision as it will provide them with significant cash value, after suffering stock price declines due to various reasons. Keurig has been posting weak results and witnessing sluggish growth for quite some time. The company has been facing the brunt of intensifying competition and slower-than-expected adoption of the 2.0 brewing machines, primarily due to confusion regarding compatible brands that can be used with the devices.

Last September, Keurig launched a single-cup cold carbonated beverage maker — Keurig KOLD — the first beverage system that brews a range of cold sparkling and still beverages at home. It also makes popular beverage brands from Coca-Cola and Dr Pepper Snapple Group DPS. Reportedly, the rollout of Keurig KOLD has also been slower than expected. To add to its woes, the strengthening dollar is eroding international sales.

Keurig Green Mountain carries a Zacks Rank #2 (Buy).

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