K-cup maker Keurig Green Mountain will buy soda maker Dr Pepper Snapple ( NYSE: DPS) to form a beverage company with $11 billion in annual revenue.
Dr Pepper Snapple shareholders will be paid a special cash dividend of $103.75 per share and will own 13% of the combined company, which will be called Keurig Dr Pepper.
Germany’s JAB Holding Company, which owns a controlling stake in Keurig, will own the remaining 87% of Keurig Dr Pepper (KDP)
KDP will have pro forma combined 2017 annual revenues of approximately $11 billion. This combination of two iconic beverage companies joins together beloved brands Dr Pepper, 7UP, Snapple, A&W, Mott’s and Sunkist with leading coffee brand Green Mountain Coffee Roasters and the innovative Keurig single-serve coffee system, as well as more than 75 owned, licensed and partner brands in the Keurig system.
Larry Young, President and Chief Executive Officer 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.
“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.”
JAB said it would make an equity investment of $9 billion to finance the transaction.
Shares in Pepper ballooned $22.98, or 24%, to $118.62
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