Coffee machine maker Keurig goes private in $13.9-bn deal
08 December 2015
Leading US maker of personal beverage systems Keurig Green Mountain Inc struck a deal yesterday with private equity firm JAB Holding Co to go private in a $13.9-billion all-cash deal, amid falling profits and rising costs.
Under the terms of transaction, a group of investors led by Luxembourg-based JAB will acquire Keurig at $92 per share in cash representing a 78-per cent premium over the stock's closing price of 4 December.
Further to the announcement of the deal, shares in Keurig shot up by a whopping 72 per cent to close at $88.89 yesterday on Nasdaq.
JAB's other partners in the purchase include strategic minority investors who are already shareholders in Dutch tea and coffee giant Jacobs Douwe Egberts BV, as well as US beverage conglomerate Mondelez International and private equity firm BDT Capital Partners.
''Keurig Green Mountain represents a major step forward in the creation of our global coffee platform. It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single serve machine,'' JAB chairman Bart Becht said.
Keurig president and CEO Brian Kelley said the deal will deliver significant cash value to the company's share holders.
Supporting the deal, global beverages giant Coca-Cola Co, which had a long association with Keurig, said: ''We have enjoyed a strong partnership with Keurig Green Mountain, and will continue our collaboration with JAB in order to capitalise on the growth opportunities in the single-serve, pod-based segment of the cold beverage industry.''
The deal, which was unanimously approved by the Keurig board, is expected to close in the first quarter of 2016, subject to customary closing conditions and regulatory approvals.
Upon closing, Keurig will become a privately owned company operating independently under JAB's global coffee platform.
Vermont-based Keurig sells coffee, teas and other beverages, as well as specialty pods, brewers and accessories in the US and Canada through its own brands and in partnerships. Keurig has over 400 different varieties and over 60 brands of coffee and other beverages.
The company's profit has been on a decline in the past three quarters on weak sales and rising costs. In the September quarter, net income plunged 33 per cent to $95 million compared to year ago, while sales dropped 13 per cent to just over $1 billion.
Luxembourg-based JAB is a private equity group, 95-per cent owned by Reimann family of Germany. It is focused on investments in companies with premium brands in the consumer goods sector.
The group owns controlling stakes in Jacobs Douwe Egberts and global beauty products major Coty Inc and luxury goods makers Jimmy Choo, Bally and Belstaff, hygiene and home products giant Reckitt Benckiser, among others.
Earlier in July, Coty agreed to acquire consumer products giant Procter & Gamble's beauty brands to create one of the world's largest cosmetics companies. (See: Procter & Gamble to sell its beauty brands to Coty for $12.5 bn)
BofA Merrill Lynch and Credit Suisse acted as advisors to Keurig in the transaction.