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Monday, December 7, 2015

Investor Group to Buy Keurig Green Mountain in $13.9 Billion Deal

Posted By on Mon, Dec 7, 2015 at 9:47 AM

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Updated at 2:17 p.m.

Waterbury-based Keurig Green Mountain has agreed to be acquired by JAB Holding Co., the investment arm of a billionaire German family, the company announced Monday. The deal, expected to close in the first quarter of 2016, is worth $13.9 billion. 

The caffeine behemoth formerly known as Green Mountain Coffee Roasters will remain based in Waterbury, Keurig said in a press release, and "will continue to be operated independently by the company’s management team and employees.” The release did not indicate whether the deal would lead to staffing changes in Vermont, where it employs roughly 2,000 people and is one of the state’s largest businesses.

The company did not immediately return a call seeking comment. But according to Gov. Peter Shumlin, who spoke to Keurig president and CEO Brian Kelley from Paris Monday morning, the coffee chief told him “there are no plans for any reduction in workforce.”

“That is incredibly good news,” Shumlin said. “Whenever there is news like this about a major employer in Vermont, there is always apprehension. But after my conversations this morning, I am confident that today’s news represents an opportunity for Keurig Green Mountain and Vermont.”

JAB and its minority partners agreed to pay Keurig shareholders $92 per share, a 78 percent premium over its Friday closing price of $51.70. The deal, which was unanimously approved by Keurig's board of directors, would take the company private. 

“This transaction will deliver significant cash value for our shareholders and offers an exciting new chapter for our customers, partners and employees by combining Keurig Green Mountain with JAB’s global coffee platform," Kelley said in written statement. "JAB fully supports Keurig Green Mountain’s culture and values as we continue to pursue our commitment to deliver innovative beverage solutions for consumers at the touch of a button.”

Keurig’s stock has fluctuated wildly in recent years. It reached $141.69 during the past year and dropped as low as $39.80. In his statement, Shumlin suggested that the company’s privatization posed a "significant opportunity.”

“Importantly, it will now be easier for the company to avoid the whims of Wall Street and focus on long-term growth, which will be good for the company, the employees and Vermont,” the governor said.

“This really is about getting back full control, not being a publicly traded company,” said Vermont Secretary of Commerce Pat Moulton.

Luxembourg-based JAB is an investment vehicle for the heirs of the late Albert Reimann, whose wealth originated in the German chemical company Benckiser. JAB owns majority stakes in a number of luxury and consumer goods companies. It already has a sizable coffee portfolio that includes Peet's Coffee & Tea, Caribou Coffee Company and the Einstein Noah Restaurant Group.

“Keurig Green Mountain represents a major step forward in the creation of our global coffee platform," JAB chair Bart Becht said in a statement. "It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single-serve machine. Keurig Green Mountain will operate as an independent entity to ensure it will further build on its coffee and technology strength and continue to serve all its partners to the best of its abilities.”

Moulton compared the transaction to global chipmaker GlobalFoundries’ acquisition last year of IBM’s chipmaking division.

“From our perspective, JAB is a coffee company. As with GlobalFoundries, it’s nice to have a coffee company owning a coffee company,” she said. “In that respect, it’s all positive. We’re not expecting to hear any bad news.”

The news comes just four months after Keurig laid off 200 employees in Vermont and 330 worldwide — roughly five percent of its global workforce. Moulton said it was “a little early to know” whether Keurig’s new owner would bolster its Vermont workforce, but, she said, Shumlin hopes to speak with JAB brass soon.

Keurig Green Mountain’s transformation into a global company began when Bob Stiller took a ski trip to Sugarbush in 1980 and decided to buy a local café. After building coffee shops around New England, Stiller’s company left the retail business in 1998 to focus on wholesale. Throughout the 1990s, Green Mountain Coffee Roasters invested more and more in a Massachusetts-based, single-serve brewing system called Keurig. Eventually, that technology accounted for the vast majority of GMCR's profits, and the company formally changed its name in March 2014.

That same year, Coca-Cola acquired a 10 percent stake in the company. It currently owns roughly 17 percent. Coke’s chair and CEO, Muhtar Kent, said in a statement Monday that the soda company is “fully supportive of the deal.”

Joining JAB in the acquisition are minority investors Mondelēz International and BDT Capital Partners. 


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About The Author

Paul Heintz

Paul Heintz

Bio:
Paul Heintz is a staff writer and political editor for Seven Days. He wrote the "Fair Game" political column from May 2012 through December 2016.

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