Keurig Green Mountain Inc will buy soda maker Dr Pepper Snapple Group Inc in a deal worth more than $21 billion, bringing the world's biggest single-serve coffee brand K-Cup and beverages such as 7UP, Snapple and Sunkist under one roof.
The deal marks Germany's JAB Holding Co latest push into the U.S. beverage market, after buying Keurig owner Green Mountain Coffee Roasters in 2016 and Mondelez's international coffee business earlier.
JAB said it would make an equity investment of $9 billion to finance the transaction for which the companies did not give an overall value. Including an $18.7 billion cash payout to Dr Pepper Snapple shareholders, Thomson Reuters calculations put the value of the deal in excess of $21 billion dollars.
Dr Pepper Snapple shareholders will receive $103.75 per share as a special cash dividend and own 13% of the combined company, which will be called 'Keurig Dr Pepper', the companies said.
Shares of Dr Pepper jumped nearly 37% in premarket trading to $131 on Monday and were set to open at a record high. The company had a market capitalization of $17.3 billion as of Friday's close of $95.65.
Keurig Chief Executive Bob Gamgort will head the combined company, while its Chief Financial Officer Ozan Dokmecioglu will be the chief financial officer.
The new company expects total net debt at closing, foreseen in the second quarter of 2018, to be about $16.6 billion.
Cadbury maker Mondelez International Inc separately said that as part of the deal, it would exchange its stake in Keurig for an equity interest in the new company.
Keurig Green Mountain was taken private by a JAB-led investor group, that included Mondelez, for about $13.9 billion in 2016. That deal created a global coffee giant that set its sights to take on industry leader Nestle.
Goldman Sachs was the lead financial adviser to Keurig and Credit Suisse advised Dr Pepper Snapple on the deal.
