Flickr: Mike Mozart

Keurig Buys Dr Pepper Snapple Group, Creating Keurig Dr Pepper

As times and trends change, so do business decisions for companies trying to stay on top of their markets. After news broke of Coca-Cola North America acquiring Topo Chico last year, we've wondered how it would affect both sales and prices of the beloved Mexican sparkling mineral water. With an eye to La Croix, even shown in the newly designed Diet Coke cans, it seems that Coca-Cola was looking for a sparkling water to compete. Now, as January 2018 comes to a close, Dr Pepper Snapple Group, Inc. announced a merger with Keurig Green Mountain, Inc., per JAB Holding Co.

The definitive merger agreement, according to the press release, will create Keurig Dr Pepper (KDP), a "new beverage company of scale with a portfolio of iconic consumer brands and unrivaled distribution capability to reach virtually every point-of-sale in North America." Essentially this means that Keurig and Dr Pepper Snapple have combined forces to produce and distribute their entire product list across the United States as part of their new company.

According to Bloomberg, Keurig Green Mountain Coffee Roasters was the fourth-largest seller in the U.S. in 2017 and Dr Pepper Snapple was the third-largest soft drink maker. After the merger is finalized, Keurig Green Mountain investors will own 87 percent of Keurig Dr Pepper.

The list of products from Dr Pepper Snapple is long and popular: Dr Pepper, Snapple, 7UP, A&W, Bai, Canada Dry, Clamato, Crush, Hawaiian Punch, IBC, Mott's, Mr and Mrs T mixers, Peñafiel, Rose's, Schweppes, Squirt, and Sunkist soda. The list from Keurig is equally impressive, with JDE, Panera Bread, Peet's Coffee & Tea, Caribou Coffee Company, Einstein Noah Restaurant Group, Inc., Krispy Kreme Doughnuts, and Espresso House. The list of beverage categories is long and rivals that of PepsiCo and Coca-Cola.

The combined companies are both the results of previous mergers. Keurig Green Mountain Inc stated that Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend, while keeping 13 percent of the combined company. That equals about $18.7 billion in cash to shareholders in addition to solidifying a huge beverage empire in the U.S.

Before the opening bell this morning, shares of Dr Pepper Snapple soared over 36 percent. The deal will close in the second quarter of the year, with approval still needed from Dr Pepper Snapple shareholders. With Dr Pepper Snapple's headquarters in Plano, Texas, this merger will be interesting for the future of the headquarters.

We've covered just how much of the US food and beverage industry is owned by a few distinct companies, and this merger closes the gap even further. To see for yourself, check out this link.

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