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K-Cups Get A $13.9 Billion Payday

JAB Holding, which is the majority owner of Peet’s Coffee and Caribou Coffee, just added K-Cup maker Keurig to its portfolio.

K-Cups Get A $13.9 Billion Payday
[Photo: Flickr user Shoshanah]

Keurig Green Mountain, the company behind the K-Cup single-serve coffee cartridges, was acquired for $13.9 billion by a group of outside investors. The acquisition means that Keurig stockholders will make a lot of money–the company’s stock value declined markedly over the past year, and shares are being purchased at $92 apiece, though they have lately traded between only $40 and $50.

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Keurig’s new owner is a European conglomerate called JAB Holding, which owns majority stakes in Peet’s Coffee, Caribou Coffee, Einstein Brothers and Noah’s Bagels, coffee and tea multinational Douwe Egberts, and a host of smaller beverage companies.

Virginia Lee, senior beverage analyst at Euromonitor, added that ”
“Even prior to JAB’s acquisition of Keurig Green Mountain Inc, JAB was the second ranked player in the global coffee market. Nestlé SA’s global coffee market share was 22.3 percent in 2014, while Mondelez International Inc, DE Master Blenders 1753 NV, and Peet’s Coffee & Tea Inc held a combined 16.2 percent, according to data from market intelligence firm Euromonitor International. By purchasing Keurig, JAB’s global coffee market share rises to 20.0% in 2014.”

“JAB is the holding company that owns JDE and Peet’s Coffee & Tea. In July 2015, Mondelez International Inc and DE Master Blenders 1753 BV completed the transaction to combine their respective coffee businesses, including Mondelez International’s coffee portfolio in France, to create Jacobs Douwe Egberts (JDE), which will be a global coffee powerhouse to compete with Nestlé in the world market. The July 2, 2015 press release stated that Mondelez received cash of approximately €3.8 billion and a 44% interest in JDE, subject to standard post-close adjustments. Acorn Holdings BV (AHBV), owner of DE Master Blenders 1753, will hold a 56% share in JDE. AHBV is owned by an investor group led by JAB Holding Company in partnership with BDT Capital Partners, Quadrant Capital Advisors and Société Familiale d’Investissements.””

Keurig Green Mountain, the result of a 2006 merger between two separate companies, has had a rough year. Its stock value has declined as a result of market saturation–most customers who are interested in K-Cup coffee machines already have them–as well as of fluctuating foreign demand. Meanwhile, Keurig has been staking a large amount of its holiday season hopes on its SodaStream competitor, called Keurig Kold; however, the Kold has reportedly had disappointing sales.

For customers, K-Cups have been a mixed proposition: While they offer the benefit of a fast, consistent cup of coffee every time, they also create massive amounts of waste and are more expensive than traditional coffeemakers for day-to-day use. That is one reason why Co.Design’s Mark Wilson has argued that “Keurig coffee is the devil.”

[via Bloomberg]