Luxembourg firm invests $18.7 billion in Keurig, Dr Pepper merger

A Luxembourg-based investment firm which invests in global consumer brands will pay $18.7 billion (€15.5 billion) to acquire soft drinks firm Dr Pepper Snapple and merge it with coffee company Keurig Green Mountain.

Keurig Green Mountain and Dr Pepper Snapple announced on Monday the companies have entered into a "definitive merger agreement" to create Keurig Dr Pepper, which will have combined revenues of $11 billion.

This joins together Dr Pepper, 7UP, Snapple, A&W, Mott’s and Sunkist with leading coffee brand Green Mountain Coffee Roasters and the Keurig singleserve coffee system as well as more than 75 owned, licensed and partner brands in the Keurig system.

Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend, valuing the company at around $18.7 billion, and retain 13% of the combined company.

JAB Holding Company, an investment vehicle for Germany's Reimann family, and JAB Consumer Fund, will inject $9 billion in equity – with the rest funded by debt.

Entities affiliated with Chicago-based merchant bank BDT Capital Partner, are also investing alongside JAB.

Upon closing of the transaction, JAB will be the controlling shareholder. The transaction is not subject to a financing condition and is expected to close in the second calendar quarter of 2018.

An investor group led by JAB Holding Company, which is based in Luxembourg, acquired Keurig Green Mountain in March 2016.

Bart Becht, partner and chairman of JAB Holding and chairman of Keurig, will serve as chairman of Keurig Dr Pepper's board of directors and JAB will also appoint four additional directors.

Keurig CEO, Bob Gamgort, who will become CEO of the combined company, said the combination of both companies will create a "new scale beverage company" with an "unparalleled distribution capability to reach virtually every consumer, everywhere".

Over the last few years, JAB Holding has acquired a number of coffee and tea companies such as Jacobs Douwe Egberts, Peet's Coffee and Tea and Espresso House, as well as bagel company Einstein Bros. and doughnut giant Krispy Kreme.