Keurig Dr Pepper buys Peet’s coffee for $18 billion

American beverage giant Keurig Dr Pepper has agreed to buy Dutch coffee company Jde Peet for 15.7 billion euros (£13.6 billion, $18.4 billion), the largest European acquisition in more than two years.

The companies plan to split into two U.S.-listed companies after the merger, one focusing on coffee brands, including Douwe Egberts and L’Or- while the other will sell soft drinks like Schweppes, Snapple and 7 Up.

The purchase aims to create a “resilient and diverse coffee business” that forms a “global coffee champion” as the industry struggles to cope with tariffs and high-priced coffee bean prices, executives said.

Keurig’s Pepper boss Tim Cofer said it was the “right time” to deal.

But the company’s stock sank more than 7% after the deal was announced, due to concerns that it exited its strategy to make the American beverage behemoth, a merger between Dr. Pepper’s soda and Green Mountain Coffee.

At the time, executives said they saw the advantage of combining distribution networks, but it has been working to deliver on that promise.

Last month, Keurig Dr Pepper executives told investors they expect the growth of their coffee business to remain “fatigue” this year, partly because the most important U.S. markets were hit by tariffs.

The new general soft drink business will be based in Texas and will be led by Mr. Cover.

Meanwhile, the new Massachusetts-based merged coffee company will have a portfolio of brands representing $16 billion in annual sales.

Executives say it will benefit from the global manufacturing footprint of more than 40 facilities.

Jacobs Douwe Egberts merged with Peet in 2019 to create Jde Peet’s, which was released the following year.

But the company is struggling to meet expectations in a drought in major coffee producers such as Brazil and Vietnam.

It clashed with retailers in Europe earlier this year, but prices rose, although recently told investors that it had resolved most of the disputes.

The transaction is worth €31.85 per share, about 20% higher than the price before the reports of last week’s trading began to spread, although still below its 2020 peak.

The proceeds are a boon to Jab Holding Co, a German Lehman family-owned investment company, which owns nearly 70% of the voting rights of JDE PEET.

It also has about 4% of Keurig Dr Pepper.