U.S. beverages giant Keurig Dr Pepper announced on Monday that it will acquire Dutch coffee company JDE Peet's for 15.7 billion euros ($18.4 billion) in cash, representing a 20% premium to its stock market valuation as of the end of last week, which sent its shares soaring.
Shares of JDE Peet's jumped 18% in early trade, on track for their best day on record.
The merged company, aiming to expand its coffee offering to more than 100 countries, plans to separate its beverage and coffee units "as soon as practicable," Keurig said.
The two resulting companies, "Beverage Co." and "Global Coffee Co.," will be listed in the U.S. and led by Keurig CEO Tim Cofer and CFO Sudhanshu Priyadarshi, respectively.
Keurig said that Global Coffee Co., with around $16 billion in combined annual net sales, will be well-positioned to profit from the world's $400 billion coffee market, while Beverage Co., with more than $11 billion in yearly net sales, will focus on North America's $300 billion refreshment beverage market.
Keurig Dr Pepper, formed in 2018 through the merger of Keurig Green Mountain and Dr Pepper Snapple, owns brands such as Dr Pepper, Snapple, 7UP and Green Mountain Coffee.
The company has a market valuation of about $48 billion, while Amsterdam-listed JDE Peet's, with brands including Jacobs, L’Or, Tassimo and Douwe Egberts, was valued at 12.76 billion euros at Friday's market close, according to LSEG data.
Keurig's shares have risen nearly 10% this year, driven by strong beverage sales. Both it and JDE Peet's have flagged the impact of high coffee bean prices, which are expected to rise again after U.S. President Donald Trump imposed a 50% levy on beans imported from Brazil, effective Aug. 6.
Prices of Arabica and Robusta beans touched record highs this year as unpredictable weather patterns pressured supply, and have been volatile recently.
JDE Peet's is majority-owned by Germany’s JAB, which also holds a significant minority stake in Keurig Dr. Pepper, according to LSEG data.
