The board of Waterbury, Vermont-based Keurig unanimously approved the deal, which is expected to close during the first quarter of 2016.
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JAB is offering $92 per Keurig share, a 78 percent premium from the stock’s closing price on Friday.
Sales of the K-Cups represent over 80% of the revenue at Keurig, which rose by $3.6 billion during the year that ended September 26. Market presence: Stumptown, a leader of the “third wave” of specialty coffee roasters, operates 10 stores across the United States and sells its wholesale beans and cold brew at grocery stores, restaurants and coffee shops.
The company manufactures coffee-makers and instant flavor pods, has agreed to be purchased for $13.9 billion by an investment group led by private-equity firm JAB Holding Co.
Holdings it has that are outside the food industry include Coty fragrances and Jimmy Choo shoes. In past articles I questioned the integrity of Keurig Green Mountain’s (NASDAQ:GMCR) CEO Brian Kelley quite publicly. The present move marks the German company’s biggest challenge yet to Nestlé’s leadership in the consumer coffee market and will take on the Swiss company’s high-margin Nespresso brand directly by tapping Keurig’s single-serve brewing machines.
“It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single serve machine”.
Keurigs’s coffee pods and single-serve machines redefined the USA market, but by past year, sales were stagnating and private-label makers of coffee pods were a competitive threat.
The largest shareholder at Keurig is Coca-Cola company with a stake of 17.4%.
The deal comes after a rocky period for Keurig. It struggled with rollout of its next generation hot brewers as consumers were frustrated that the new coffee makers didn’t work with Keurig’s signature K-Cups. After touting the next growth chapter for the company to come from Keurig Kold and its failed debut, the company can now phase it out and completely and privately do away with the product if it so chooses.
JAB is acquiring Keurig in partnership with investors who are already shareholders in Jacobs Douwe Egberts, including Mondelez International Inc and entities affiliated with BDT Capital Partners.
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For the full-year fiscal 2015, Keurig reported sales fell four per cent and net income dropped 16 per cent. It bought Caribou Coffee Co and Peet’s Coffee & Tea in 2012 and formed a joint venture between coffeemakers DE Master Blenders and Mondelez International in July.
