Keurig Dr Pepper (KDP) Acquires JDE Peet's | Future of "Beverage Co." | JAB Holding Company

By now, you’ve undoubtedly heard the business news that Keurig Dr Pepper entered into a definitive agreement to acquire JDE Peet's worldwide portfolio of beloved coffee brands. Under the terms of the agreement, KDP will purchase all outstanding ordinary shares of JDE Peet's…valuing the all-cash transaction at approximately $18.3 billion. And you might be thinking, “wow I didn’t realize KDP was Mr. Money Bags,” especially after I mentioned in content recently that the almost $2 billion GHOST Lifestyle acquisition last year was its largest deal to date. But to understand what’s really going on…it requires a history lesson that begins with Johann Adam Benckiser founding an industrial chemicals business in 1823. Though, the real business history nerds will recognize the initials of Johann Adam Benckiser for another reason. JAB Holding Company was formed in 2012, as a partner-led investment firm, with the consolidation of all business assets. During that early formation process, JAB Holding Company created the Coffee & Beverages Investment Platform via the take private transactions of Peet's Coffee and D.E Masterblenders. Then, a few years later…that investment platform expanded when it merged with the coffee division of Mondelez International (essentially creating the JDE portion of JDE Peet’s). But in 2016, JAB Holding Company was involved in another coffee-related “take private transaction,” this time acquiring Keurig Green Mountain for $13.9 billion. Then, in 2018, Keurig Green Mountain acquired Dr Pepper Snapple Group for $18.7 billion…with JAB Holding Company owning (at the time) 73% of the combined Keurig Dr Pepper company. And while ownership percentages have fluctuated greatly over the years (especially on the KDP side), all roads still lead back to JAB Holding Company (even though you will see only a minor mention of it buried within the JDE Peet's transaction details section of the press release). So, what I’m saying is JAB Holding Company basically created both JDE Peet’s and KDP…and thus, JAB Holding Company can essentially recreate JDE Peet’s and KDP! After the M&A transaction closes, KDP plans to separate into two independent, U.S.-listed publicly traded companies…currently given generic “Global Coffee Co.” and “Beverage Co.” placeholder names. Yet, with a portfolio of iconic and emerging brands (generating more than $11 billion in annual net sales), a differentiated and expanding DSD distribution system, and a proven, capital-efficient “build, buy, partner” growth model, “Beverage Co.” will ACTUALLY not change much (at least initially). Instead, “Beverage Co.” will significantly improve due to sharper focused decision-making, tailored capital allocation strategies, and enhanced optionality overall. Essentially, the previous KDP “Refreshment Beverages” segment gets better through simplification. In just two short years, KDP went from getting its categorical ass whipped to controlling the most intriguing “active nutrition” brand portfolio by (1) acquiring a large stake in the maker of C4 Energy, (2) strategically partnering with Electrolit and Black Rifle Coffee, (3) acquiring GHOST, and (4) getting access to Bloom Nutrition through a proxy investment by Nutrabolt. But then, for the final part of my latest first principles content piece, I'll reconsider an element from my previous KDP “active nutrition” brand portfolio content…and examine possible new contagion effects from this separation announcement.