Culture

Keurig and Dr Pepper to unite

Keurig and Dr Pepper to unite”

JAB, the holding company of the German billionaire Reimann family, has been on an acquisition spree in recent years.

Jonathan Buxton, partner and head of consumer and retail at Cavendish Corporate Finance, said:"The merger of JAB Holdings" Keurig Green Mountain and Dr Pepper Snapple to form "Keurig Dr Pepper' highlights the heightened competition in the food and beverage market".

Shareholders of Dr. Pepper Snapple will receive a special cash dividend of $103.75 per share and hold 13 percent of the new company.

The two companies said yesterday that a combined entity would have revenue of $11 billion, with $5.2 billion coming from Dr Pepper Snapple and the remainder being accounted for by Keurig Green Mountain.

The Volatility 3m of Dr Pepper Snapple Group, Inc. It makes over 400 types of coffee and other drinks.

The deal comes as Coke and Pepsi has experience a decline in sales, particularly among millennials who are favoring specialty coffees for their caffeine fix.

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Dr Pepper has been diversifying its product mix, such as spending $1.7 billion in 2016 to buy Bai Brands, known for making antioxidant beverages. In fact, in 2016, Keurig Dr Pepper would have been similar in size to confectionery giant Ferrero - although since October, the Italian company has continued to build on its presence in North America with major moves for Ferrara Candy and Nestlé's U.S. confectionery arm. That alone makes it the largest acquisition within the food and beverage industry in the past 12 months - in fact, it's the biggest deal since German chemical giant Bayer agreed to acquire U.S. seeds company Monsanto in September 2016.

In July 2016, JAB Beech paid $1.35 billion for Krispy Kreme in a deal worth $21 a share, representing a 25 percent premium over its share price of $16.86 when the deal was announced in May 2016.

Keurig and Dr Pepper said the combination would create "compelling value for shareholders", including anticipated synergies of $600 million by 2021.

JAB will be the controlling shareholder. In reality, the true value of the acquisition is likely to be much higher, especially given that Dr Pepper Snapple shareholders will retain 13% of the combined company.

Bob Gamgort, chief executive of Keurig, would serve as chief executive of the combined company. "We are excited to combine with Keurig to build on the rich heritage and expertise of both companies and provide the highest-quality hot and cold beverages to satisfy every consumer throughout the day".

Larry Young, president and CEO of Dr Pepper Snapple, said, "This transaction will deliver significant and immediate value to our shareholders, along with the opportunity to participate in the long-term upside potential of our combined company and attract new brands and beverage categories to our platform in a fast-changing industry landscape". In general, a company with a score closer to 0 would be seen as undervalued, and a score closer to 100 would indicate an overvalued company. (NYSE:DPS) is 0.478944. Leverage ratio is the total debt of a company divided by total assets of the current and past year divided by two. It expects to maintain an investment grade rating.



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