Keurig buys Peet’s Coffee in an $18.4 billion deal

Keurig Dr Pepper (KDP) is making a bold bet on coffee. The U.S. beverage giant announced Monday it will acquire Dutch coffee and tea company JDE Peet’s in a deal valued at roughly €15.7 billion ($18.4 billion), a move aimed at reviving its struggling coffee division and reshaping the company’s structure.

Under the terms, KDP will pay €31.85 ($37.30) per share in cash, representing a 33% premium over JDE Peet’s 90-day volume-weighted average price. Ahead of the deal’s closure, JDE Peet’s will distribute its previously declared dividend of €0.36 per share.

The deal, first reported by The Wall Street Journal, is expected to generate $400 million in cost synergies within three years.

Market Reactions

Shares of JDE Peet’s surged nearly 17% in early trading, reflecting investor optimism over the premium payout. Meanwhile, KDP stock tumbled roughly 8% as investors weighed the risks of the major cash commitment and integration challenges.

Strategic Shift for KDP

KDP, whose portfolio includes Dr Pepper, 7Up, Snapple, and Green Mountain Coffee, has been grappling with weakness in its U.S. coffee business. In the second quarter, coffee sales dipped 0.2% to $900 million, driven by declining shipments of Keurig brewers and single-serve pods.

To counter that trend, KDP has sought to capture cost-conscious consumers who brew at home, while also venturing into cold coffee to compete with Starbucks and Dunkin offerings.

The JDE Peet’s acquisition positions KDP as a heavyweight in global coffee, giving it access to household brands such as Peet’s Coffee, Jacobs, L’OR, Senseo, and Douwe Egberts.

Planned Breakup: Coffee and Beverages Go Separate Ways

In a major structural shift, KDP said that once the takeover is complete, it intends to split into two separately listed U.S. companies—one dedicated to coffee and the other to beverages.

• The coffee company is projected to generate $16 billion in annual net sales and will be led by current KDP CFO Sudhanshu Priyadarshi.
• The beverages company, with expected $11 billion in annual net sales, will continue under current CEO Tim Cofer.

The separation would effectively undo KDP’s 2018 merger with Dr Pepper Snapple, which created the third-largest beverage company in North America with about $11 billion in annual revenues at the time.

Leadership and Timeline

JDE Peet’s CEO Rafael Oliveira will remain in his role until the deal closes. Afterward, KDP’s reorganization is expected to proceed at the “earliest opportunity,” though no timeline has been set.

Big Picture

The acquisition signals a dramatic reshaping of KDP’s identity. By doubling down on coffee through JDE Peet’s and then splitting off beverages, KDP appears to be acknowledging that coffee and soft drinks may be stronger as standalone businesses than under a single roof.

If successful, the move could give the U.S. beverage maker a firmer foothold in the fast-evolving coffee market—while offering investors a clearer choice between a global coffee pure-play and a traditional beverage company.