AMSTERDAM—JAB BevCo B.V., a significant shareholder of Keurig Dr Pepper Inc. (NASDAQ:KDP), sold 69 million shares of common stock in a transaction valued at approximately $2.25 billion. The shares were sold at a price of $32.65 each, according to a recent SEC filing.
The sale was conducted through an underwriting agreement with Morgan Stanley & Co. LLC. Following this transaction, JAB BevCo B.V. holds 214,443,879 shares of Keurig Dr Pepper. JAB BevCo is a subsidiary of JAB Holding Company, a global investment firm based in Luxembourg.
This transaction is part of a previously disclosed secondary offering by JAB BevCo, which continues to maintain a significant stake in the beverage company.
In other recent news, Keurig Dr Pepper reported a 3.1% increase in third-quarter earnings for 2024, along with a 3.5% growth in volume/mix. The company also secured a 60% stake in the energy drink brand, GHOST, a strategic acquisition expected to contribute approximately 300 basis points to the company's growth, according to an analysis by Jefferies. On the financial front, Keurig Dr Pepper has secured a term loan facility totaling $1.25 billion, providing additional financial flexibility for general corporate purposes.
In board changes, Lubomira Rochet has resigned, with Frank Engelen, the Managing Partner and Chief Financial Officer of JAB Holding Company, joining the board. The company also completed a $2.3 billion share sale, which was managed by Morgan Stanley & Co. LLC, acting as the sole underwriter.
Jefferies, however, has reduced the company's price target to $41 from $42, while maintaining a Buy rating. Despite challenges in the U.S. coffee segment, Keurig Dr Pepper remains focused on its full-year outlook and is preparing for potential inflationary impacts. These are some of the recent developments in the company's operations.
InvestingPro Insights
In light of JAB BevCo's recent sale of Keurig Dr Pepper (NASDAQ:KDP) shares, it's worth examining some key financial metrics and insights from InvestingPro to provide context for investors.
Despite the large share sale, KDP's fundamentals remain solid. The company boasts impressive gross profit margins, with InvestingPro data showing a gross profit margin of 55.69% for the last twelve months as of Q3 2023. This strong profitability is complemented by a dividend yield of 2.79%, with the company having raised its dividend for four consecutive years, according to an InvestingPro Tip.
Interestingly, while JAB BevCo reduced its stake, KDP's management has been aggressively buying back shares, as noted by another InvestingPro Tip. This could signal management's confidence in the company's future prospects and potentially help offset the impact of the large share sale on the stock price.
The stock's current valuation metrics also present an intriguing picture. KDP is trading at a P/E ratio of 19.85, which is considered low relative to its near-term earnings growth potential, as highlighted by InvestingPro. This suggests that despite the recent share sale, the stock might still offer value to investors.
For those seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond what's mentioned here. In fact, there are 6 more InvestingPro Tips available for KDP, providing a deeper dive into the company's financial health and market position.
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