Keurig Dr Pepper and JDE Peet’s have agreed to a deal where KDP will acquire JDE Peet’s for EUR 15.7 billion in an all-cash transaction. JDE Peet’s shares rose 17% on the news, creating the largest pure-play coffee company. The deal values JDE Peet’s at 10 times 2024 adjusted EBITDA, with limited regulatory concerns and unlikely competing bids.

The combination of KDP and JDE Peet’s brings complementary strengths, with JDE Peet’s leading in roast and ground coffee in Europe and KDP dominating single-serve coffee systems in North America. The deal received unanimous board support and 69% of voting power, including controlling shareholder JAB. JDE Peet’s share price was up nearly 60% year to date before the announcement.

Morningstar raises the fair value estimate for JDE Peet’s to EUR 30.00 per share, reflecting the EUR 31.85 buyout price. The deal is seen favorably, with a 20% premium to trading levels prior to the news and a 35% premium to the fair value estimate. Substantial innovation will be needed to meet competitive pressure and evolving consumer preferences.

Read more at Morningstar: Shares Jump 17% on EUR 15.7 Billion Keurig Dr Pepper Takeover