Keurig Dr Pepper Gains $1.5 Billion for JDE Peet's Buyout

• The additional financing reduces projected debt to about 4.5 times earnings post-acquisition, down from 4.6 times projected in October when the company raised $7 billion
• Keurig Dr Pepper is no longer considering a partial public listing of the beverages unit, one of two entities it planned to carve out after the merger
• The acquisition aims to help Keurig Dr Pepper compete with industry leader Nestle and better manage high commodity costs, with funding led by Apollo and KKR

Keurig Dr Pepper Secures $1.5B for JDE Peet's Acquisition

Key Transaction Details:

Keurig Dr Pepper has raised an additional $1.5 billion in equity funding from long-term investors to support its approximately $18 billion acquisition of Dutch coffee company JDE Peet's. The financing round was led by Apollo and KKR, with early participation from T. Rowe Price Investment Management.

Timeline and Structure:

The deal is now expected to close in early April, with Keurig Dr Pepper targeting a split of the combined business into two entities—Global Coffee Co and Beverage Co—by year-end. The company has abandoned plans for a partial public listing of the beverages unit, which was originally one of two planned carve-outs post-merger.

Financial Impact:

The additional funding improves Keurig Dr Pepper's leverage profile, reducing projected debt levels to approximately 4.5 times earnings after acquisition completion, down from the 4.6 times estimated in October. The company had previously raised $7 billion in October to fund the transaction.

Strategic Rationale:

The acquisition, first announced in August of the previous year, positions Keurig Dr Pepper to compete more directly with industry leader Nestlé while addressing challenges from high commodity costs. The combination creates a major global coffee player through the merger with JDE Peet's.

Market Implications:

This consolidation in the beverage sector signals increasing competitive pressure among major players. The successful financing at improved terms demonstrates strong investor confidence in the deal's strategic merit, while the restructuring plans indicate management's focus on operational efficiency and market positioning in distinct beverage categories.