Shares of Dr Pepper Snapple Group Inc. DPS soared higher by more than 35 percent Monday morning after news of the beverage company will be acquired by coffee-maker Keurig Green Mountain.
What You Need To Know
Dr. Pepper Snapple and Keurig Green Mountain announced plans to combine themselves into one new company called Keurig Dr. Pepper. As part of a deal, Dr. Pepper Snapple investors will receive $103.75 per share in a special one-time cash dividend and own 13 percent of the combined entity.
Keurig Green Mountain, best known for its single serve brewing system, was acquired by Europe-based a JAB Holdings-led investor group in 2016. JAB is a global investment firm that has been building a portfolio of coffee and restaurant assets, including Peet's Coffee & Tea, Krispy Kreme, and more recently, Panera Bread.
Why It's Important
A Reuters report dated Jan. 2 said JAB Holdings is still hungry for incremental M&A activity. Some among Wall Street suggested Dunkin Brands Group Inc DNKN is an ideal buy-out target, although any such deal has not come to fruition.
What's Next?
"The combination of Dr Pepper Snapple and Keurig will create a new scale beverage company which addresses todays consumer needs, with a powerful platform of consumer brands and an unparalleled distribution capability to reach virtually every consumer, everywhere, Bob Gamgort, Chief Executive Officer of Keurig, said in the press release.
Dr Pepper Snapple shares traded around $131.25, up 37.2 percent in pre-market trading.
JAB Buys Panera; Analyst Foresees Near-Term Slowdown In Restaurant M&A
Image credit: cyclonebill, Flickr
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