Keurig Green Mountain Inc., best known for their single-serve K-Cup coffee pods, announced plans on Monday to buy Dr Pepper Snapple Inc.
The deal will pay $18.7 billion in cash to shareholders, Bloomberg reports, and will assemble a massive beverage distribution network in the U.S. under a new company name, Keurig Dr. Pepper (KDP). The company will remain under the control of family-run investment firm JAB Holding Company and is projected to earn $11 billion in annual revenue.
“This transaction will deliver significant and immediate value to our shareholders, along with the opportunity to participate in the long-term upside potential of our combined company and attract new brands and beverage categories to our platform in a fast-changing industry landscape,” Larry Young, President and CEO of Dr Pepper Snapple, said in a statement. “We are excited to combine with Keurig to build on the rich heritage and expertise of both companies and provide the highest-quality hot and cold beverages to satisfy every consumer throughout the day.”
Keurig and Dr Pepper Snapple will continue to run out of their current respective locations: Waterbury, Vt., and Plano, Texas.
“We are very excited about the prospect of KDP becoming a challenger in the beverage industry,” Bart Becht, Partner and Chairman of JAB Holding Company and Chairman of Keurig, said in a statement. “Management’s proven operational and integration track record along with their commitment to innovation and potential future brand consolidation opportunities, while maintaining an investment grade rating, positions the company well for long-term success and material shareholder value creation.”
The deal is slated to close in this year’s second quarter.