The top at-home coffee company is buying the company known for a popular soft drink and iced tea.
Keurig announced on Monday that it is buying Dr Pepper Snapple Group. The purchase will form a new company, Keurig Dr Pepper, allowing it to market “hot and cold beverages to satisfy every consumer throughout the day,” the New York Times reported.
Officials say the new company will also save $600 million by combining warehouse and delivery systems and increase the number of retailers that carry their brands, the Times reports. Experts say similar deals are becoming more common for savings on distribution.
Keurig Dr Pepper’s annual sales are projected at $11 billion and will change some branding aspects of the company. Snapple is currently sold in K-Cups for Keurig brewing machines. Dr Pepper brands could also be packaged that way in the future.
Keurig Green Mountain Inc. was acquired in 2016 by JAB Holding Co. as part of a partnership agreement with Mondelez International. JAB Holding markets other coffees, too, and Keurig officials said Monday the company plans to start selling those as well as expand its bottled iced coffee drinks. JAB, the company that owns the Panera Bread restaurant chain, also owns the Krispy Kreme, Stumptown, and Peet’s brands. Keurig owns the Green Mountain Donut Shop coffee brands, both sold as K-Cups.
— Bloomberg (@business) January 29, 2018
Snapple’s Bai brand of low-calorie drinks are also expected to be a main seller. Bai was acquired by Dr Pepper in 2017, adding carbonated flavored drinks and sparkling water to its portfolio.
The new company will see JAB as the controlling shareholder. Mondelez will hold an approximate 14 percent share.
The sale will pay Dr Pepper Snapple shareholders $103.75 per share in a special cash dividend and keep 13 percent of the new corporation. The sale is pending approval by Dr Pepper Snapple shareholders.
Meanwhile, Dr Pepper Snapple Group Inc. soared 22 percent to $117.07 as markets closed Monday.
The sale is expected to be completed by the second quarter 2018. The companies will trade separately until then. A new ticker symbol is pending, the company said. Keurig will remain in its Waterbury, Vermont, headquarters. Dr Pepper Snapple will stay in Plano, Texas.