Keurig Green Mountain’s (JAB) $18.7 billion Acquisition of Dr Pepper Snapple


 

Overview of the deal

  • Acquirer: Keurig Green Mountain (JAB Holding)

  • Target: Dr Pepper Snapple

  • Estimated value: $18.7 bn

  • Announcement date: 29/01-18

  • KGM/JAB Advisors: Goldman Sachs

  • Dr Pepper Snapple Advisors: Credit Suisse


In the last six years, JAB Holding has spent close to $60 billion on acquisitions in order to build an empire in the coffee and soft drinks industry. The German conglomerate, owned by the Reimann family, had been searching for another U.S. mega-deal for months. The result was the largest soft drink deal ever: the $18.7 billion acquisition of Dr Pepper Snapple by JAB’s subsidy Keurig Green Mountain. The merger will create a beverage giant, which might put pressure on Coca-Cola and PepsiCo and even Starbucks and Dunkin’ Donuts.


The main rationale behind this deal is to enhance the core business performances by leveraging economies of scale and scope; JAB has been one of the leaders of that strategy. The combined entity will hold a portfolio of more than 125 brands – from Dr Pepper and 7Up to K-Cup and Peet’s Coffee. Furthermore, JAB will gain access to a massive beverage distribution network, giving the investment company even greater control over consumer preferences and trends.


“Being sure of what JAB plans for the future is tricky. It is managed by professionals, but decisions on what to buy are taken by the Reimann family.” -The Economist

Company details (JAB Holding)

Keurig Green Mountain is a speciality coffee maker company which sources, produces, and sells coffee and other beverages under various brands. The company is owned by JAB Holding, a German conglomerate with its main focus on investments in consumer goods and luxury fashion.


- Founded in 1981, headquartered in Waterbury, USA

- CEO: Robert Gamgort

- Number of employees: 6,600

- 2017 Revenue: $4.1 bn - 2017 Adjusted Op. Income: $1.1 bn

*Currently privately held, hence lack of financial information

Company details (Dr Pepper Snapple)

Dr Pepper Snapple is a leading producer of flavoured beverages in North America which consists of more than 50 brands including Dr Pepper, 7Up, Orangina, Snapple and Schweppes. It is the third largest producer of soft drinks in the U.S.


- Founded in 2008, headquartered in Texas, USA

- CEO: Larry Young

- Number of employees: 19,000

- Market Cap: $21.99 bn - EV: $26.48 bn

- LTM Revenue: $6.8 bn - LTM EBITDA: $1.5 bn