Keurig Green Mountain Inc., the maker of single-serve coffee pods, will be purchased by the owner of Peet’s Coffee & Tea for about $13.9 billion, creating a global coffee giant.
Keurig announced Monday that it will be bought by an investor group led by Germany’s JAB Holding Co. (JAB) for $92 a share, which is a premium of roughly 77.9 percent more than Keurig’s closing stock price Friday.
After the deal closes, the company will be privately owned and will still operate independently with its Vermont management team. Keurig Chief Executive Brian Kelley called the deal a “new chapter” for Keurig, The Los Angeles Times reports.
This is JAB’s latest deal as it hopes to become a worthy opponent to world coffee market leader Nestle SA, according to Reuters. This deal will give JAB the leg up in the $6.1 billion North American single-serve coffee market; Nestle’s presence is not huge here.
JAB is a group that’s focused on long-term investments. The company has had notable stakes in beauty products manufacturer Coty Inc., high-fashion and extra fabulous brand Jimmy Choo and Peet’s. And Peet’s recently obtained coffee companies Intelligentsia Coffee and Stumptown Coffee Roasters, both of which are considered “super-premium.”
Keurig called JAB “strategic minority investors” that are already shareholders in the Netherlands-based global coffee and tea company Jacobs Douwe Egberts B.V. Jacobs Douwe Egberts owns Keurig’s rival Tassimo and Maxwell House in addition to other tea and coffee brands, LA Times reports.
“Keurig Green Mountain represents a major step forward in the creation of our global coffee platform,” JAB’s chairman, Bart Becht, said in a statement. “It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single-serve machine.”
Shares of Keurig were trading at $89.89 shortly after the opening, which was below the offer price of $92 per share, Reuters reports. However, the shares had dropped more than 60 percent this year until Monday.
The company has been criticized for its plastic pods, which are immediately discarded, designed to eliminate the mess that coffee grounds can create. Critics claimed that Keurig produced enough of those single-serve plastic pods in 2014 to circle the globe more than 10 times!
By the end of the year, Keurig introduced a new coffee maker that would accept pods made of more recyclable materials. The company plans to have ONLY recyclable pods by 2020.