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Investing.com-- Keurig Dr Pepper (NASDAQ:KDP) has agreed to buy Dutch coffee and tea group JDE Peet’s (AS:JDEP) in a deal valued at about $18 billion, a move aimed at revitalizing the U.S. company’s flagging coffee business, the companies announced Monday.
The deal was first reported by the Wall Street Journal.
Shares in JDE Peet’s soared 17% in Amsterdam following the official announcement.
Under the terms, JDE Peet’s investors will receive €31.85 ($37.30) a share in cash, a 33% premium to the company’s 90-day average price. The purchase values the equity at roughly €15.7 billion ($18.4 billion).
Before completion, JDE Peet’s will pay shareholders a previously announced dividend of €0.36 per share. The companies expect the tie-up to deliver $400 million in cost savings within three years.
Keurig Dr Pepper, whose portfolio includes Dr Pepper, 7Up, Snapple and Green Mountain Coffee, has struggled with declining sales in its U.S. coffee segment. Revenue in that division slipped 0.2% to $900 million in the second quarter, hurt by weaker demand for single-serve pods and Keurig machines.
The company has been trying to attract more price-conscious consumers who brew coffee at home while expanding into cold coffee products to compete with rivals such as Starbucks (NASDAQ:SBUX) and Dunkin.
As part of the deal, Keurig Dr Pepper plans to separate its beverage and coffee operations into two independent, U.S.-listed companies once the transaction closes.
The split would effectively reverse the 2018 merger of Keurig and Dr Pepper Snapple , which created the continent’s third-largest drinks company with annual sales of around $11 billion.
The new standalone coffee business, projected to generate $16 billion in yearly net sales, will be led by Keurig Dr Pepper’s current chief financial officer, Sudhanshu Priyadarshi.
JDE Peet’s will also pay a previously declared dividend of €0.36 per share before the deal closes, without any adjustment to the offer price.
(Ayushman Ojha contributed to this report.)