JAB Holding Company announced that it has plans to acquire the personal beverage system company -- Keurig Green Mountain. The company reportedly offered $92 per share as the acquisition price, making the total equity value to reach as much as $13.9 billion.
The deal will allow JAB to build a stronger and more aggressive presence in all aspects of the coffee industry. It will also pave the way for the company to consolidate and dominate the coffee market on a global scale.
"This is part of a much, much bigger strategy," said Pablo Zuanic, an analyst for Susquehanna Financial Group. "JAB wants to be the Budweiser of the coffee space ... Just as you've seen Bud consolidate beer, they want to consolidate coffee."
JAB Holding Company is a privately held group that focuses on establishing long-term investments in certain companies known to have attractive growth, premium brands and strong margin dynamics.
Vontobel analyst Jean-Philippe Bertschy said that the acquisition deal with Keurig "is a fantastic opportunity for them to be really a global player in the coffee market. Now they can have some scale in the U.S."
Keurig Green Mountain is a company that focuses on revolutionizing the beverage experience with the use of innovative technology and brand partnerships. It boasts an ever growing family of over 80 well-loved brands and over 575 varieties of beverage.
The company's Board of Directors had unanimously approved the acquisition offer which is expected to finalize in early 2016.
"Keurig Green Mountain will operate as an independent entity to ensure it will further build on its coffee and technology strength," said Bart Becht, JAB's chairman.
Keurig has reportedly struggled with dropping sales, citing increased competition and slow adoption of its new brewing machines as the reasons for the decline. Apparently, consumers had displayed confusion on which of the company's brands could be used with the new machines.
In terms of market share, Keurig holds 61 percent based on the data from the market research company Euromonitor International. The company currently leads the $6.1 billion single-serve coffee market in North America.
"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," said Brian Kelley, president and chief executive officer of Keurig.
