Keurig Dr Pepper Buys JDE Peet’s for $18 Billion
- JAB Holdings is considering reuniting JDE Peet's, the coffee and tea company it controls, with Keurig Dr Pepper, in which it still holds a significant stake.
- JAB Holdings, a European investment group, currently owns JDE Peet's, a global coffee and tea giant with over 50 brands including Peet's Coffee, Douwe egberts, and Kenco.As of...
- JAB's involvement extends to Keurig Dr Pepper, where it was a controlling shareholder prior to the 2018 merger.
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JDE Peet’s and Keurig Dr Pepper Explore Potential Merger
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JAB Holdings is considering reuniting JDE Peet’s, the coffee and tea company it controls, with Keurig Dr Pepper, in which it still holds a significant stake. The move aims to unlock value from Keurig Dr Pepper’s struggling coffee business and capitalize on the strength of its soft drinks portfolio.
Background: A Complex Ownership Structure
JAB Holdings, a European investment group, currently owns JDE Peet’s, a global coffee and tea giant with over 50 brands including Peet’s Coffee, Douwe egberts, and Kenco.As of Friday’s close, JDE Peet’s had a market value of $15 billion Financial Times. Keurig Dr Pepper, meanwhile, is valued at $47 billion.
JAB’s involvement extends to Keurig Dr Pepper, where it was a controlling shareholder prior to the 2018 merger. Following the merger, JAB reduced its stake but remains a significant minority shareholder.
Why a Merger Now? Performance Disparities
While Keurig Dr pepper’s soft drink brands – Dr pepper, Canada Dry, and Snapple – have thrived since the 2018 merger, its coffee division has faced challenges due to intense competition. A person briefed on the matter indicated that JAB believes a separation and subsequent recombination focused on strengths would unlock greater value from the soft drinks group The Wall Street Journal.
Keurig Dr Pepper itself acknowledged in July that its coffee unit’s performance would remain ”subdued” through fiscal year 2025, highlighting ongoing difficulties with its at-home brewing platform despite broader growth in the non-alcoholic beverage market Reuters.
External Factors and Strategic Shifts
The coffee unit’s struggles have been exacerbated by rising costs linked to tariffs imposed by former US President Donald Trump on goods imported from several countries. These tariffs added to the competitive pressures already facing Keurig Dr Pepper’s coffee business.
In response, Keurig Dr Pepper has shifted its acquisition strategy towards partnerships with rapidly growing beverage brands. A notable example is the nearly $1 billion deal in 2023 to acquire a 60% stake in energy drink company Ghost Keurig Dr Pepper Newsroom.