Keurig Dr Pepper nets US$7B investment to complete JD Peet acquisition

Keurig Dr Pepper (KDP) has announced new details about its strategy and financing related to the acquisition of Dutch multinational coffee and tea company JDE Peet’s, and its planned separation into two independent companies. The beverage giant has received US$7 billion in investments, co-led by Apollo and global investment firm KKR.

In August, KDP revealed plans to acquire JDE Peet’s in an all-cash deal valued at €15.7 billion (US$17.4 billion). The agreement sets the stage for KDP to later split into two publicly traded companies, creating a dedicated global coffee business and separate North American beverages company.

The company recently held an investor’s day, during which executives outlined the latest updates regarding JDE Peet.

“We have a proven track record of value creation in beverages, and our board and management team have conviction in the merits of the planned transaction and subsequent creation of two winning companies — a global coffee powerhouse and the most agile North American beverage leader,” says Tim Cofer, KDP CEO.

“We are confident this transaction positions KDP to generate significant shareholder value, and we have robust plans to deliver with success.” 

“Since the announcement, we have also carefully considered shareholder feedback and are responding with decisive actions, including new strategic investments to strengthen our balance sheet and a refreshed approach to leadership structure, while kicking off rigorous transformation planning.”

Breakdown of the investment

Of the total US$7 billion investment, US$4 billion will be invested in a new K-Cup Pod and another single-serve manufacturing joint venture, co-led by Apollo and KKR, with participation from Goldman Sachs Alternatives.

KDP will retain a controlling interest and operational control of the related assets. The company notes that, over the next decade, the all-in cost of this capital is expected to be approximately 7.3–7.4%.

Apollo and KKR will invest US$3 billion into KDP’s Beverage Co business, which will encompass its portfolio of soft drinks.

“KDP’s separation plan represents a pivotal moment for the company, and we are proud to support this next phase through a comprehensive capital solution that brings together the best of Apollo’s ecosystem across our High Grade Capital Solutions and Hybrid franchises, in partnership with KKR,” adds Apollo Partners Jamshid Ehsani and Matt Nord.

“Our investments reflect deep conviction in both Global Coffee Co. and Beverage Co., and knowing each will benefit from strong leadership, focused operating models, and optimized capital structures to drive long-term value creation as leaders in their respective categories.”

The company plans to be “operationally ready” to separate into two independent entities by the end of 2026.

Tim Cofer will continue as KDP’s CEO until the separation is completed and then become CEO of Beverage Co. Meanwhile, the KDP Board of Directors is searching for the future CEO of Global Coffee Co.