Keurig Dr Pepper is said to be close to making a record deal to take over Dutch coffee giant JDE Peet’s for around $18 billion, the Wall Street Journal stated.
The acquisition, if completed, would be among the biggest deals in the international coffee and beverage space in recent years. Individuals close to the negotiations informed the publication that the firms intend to consolidate first and then demerge their coffee and beverage operations to achieve optimal expansion opportunities in both spaces.
JDE Peet’s, whose brands include L’Or, Tassimo and Douwe Egerts, has a value of about $15 billion. Keurig Dr Pepper, on the other hand, has a market capitalization of almost $50 billion, according to data from LSEG. Analysts say the acquisition would give Keurig Dr Pepper greater leverage in the international coffee market, especially in Europe where JDE Peet’s is dominant.
The transaction arrives on the heels of JDE Peet’s maintaining robust profits amid increasing coffee prices. Only last month, the firm upped its full-year outlook after posting half-year adjusted operating earnings of €709 million ($831 million), ahead of analysts’ estimates. That result highlighted the strength of its brand portfolio and demand for coffee around the world.
For Keurig Dr Pepper, this deal is another big push into expansion outside its flagship soft drinks business. It acquired a 60% interest in energy-drink manufacturer Ghost last year in a $990 million deal with a plan to acquire the other interest by 2028. That purchase underscored Keurig Dr Pepper’s desire to diversify and build up its refreshment portfolio.
If finalized, the JDE Peet’s acquisition would redefine the face of the beverage industry, combining Keurig Dr Pepper’s solid U.S. footprint with JDE Peet’s world coffee leadership. Analysts comment that splitting coffee and beverage segments after the merger would also form more specialized companies in a position to drive growth on their own.
Neither Keurig Dr Pepper nor JDE Peet’s has made any public statement regarding the reported negotiations. As global coffee consumption continues to grow and competition intensifies in both traditional and specialty channels, the fate of this potential $18 billion merger will be keenly observed by investors and competitors alike.
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