Business Strategies / Industry News

Keurig Sold for $14 Billion to Private Equity Firm

By Lauren R. Hartman, Product Development Editor

Dec 07, 2015

Coffee news is getting hotter. Keurig Green Mountain has agreed to be acquired by an investment group led by private equity firm JAB Holding Co., for about $13.9 billion in cash. 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.

The purchasers include the backers of Netherlands-based Jacobs Douwe Egberts, a global tea and coffee company formed in 2014, as the combination of the coffee franchises of Oreo-maker Mondelez International and D.E Master Blenders.

The deal comes as sales of the coffee pods and brewers that Keurig popularized are slumping. The company has been cutting costs, slashed 5 percent of its workforce in August, and introduced new products to offset the downturn in its core offerings.

The move also is a sign that Keurig and JAB's other properties — including Jacobs Douwe Egberts, Peet's Coffee & Tee and Caribou Coffee — may cross paths as JAB seeks to reverse Keurig's fortunes. JAB says it will operate Keurig (GMCR) as an independent, private subsidiary based in Waterbury, Vt.

Financial analysts say the Keurig purchase could be part of a much bigger global strategy by JAB to "consolidate the coffee business in Europe and the U.S." by becoming a major global player. Buying Keurig may get JAB Holding closer to coffee market leader Nestle, they said.

"Keurig Green Mountain represents a major step forward in the creation of our global coffee platform," said JAB Chairman Bart Becht in a statement. "It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single serve machine."
Until the deal was announced, Keurig shares had fallen 61 percent for the year, down from $132.81, as investors reconsidered the company's growth prospects. The company also recently introduced pods used to create single-serve helpings of Campbell Soup.