Keurig Dr Pepper has lifted its full-year sales forecast and secured $7 billion from private equity giants KKR and Apollo Global Management to fund its $18 billion acquisition of Dutch coffee group JDE Peet’s. The move helped ease investor concerns over leverage, sending KDP shares up 7% in late morning trading.
The beverage maker plans to split the merged company’s operations into two listed entities — one focused on coffee and the other on its beverage portfolio, including Dr Pepper. Of the total investment, $4 billion will go toward a new joint venture for K-Cup pod and single-serve manufacturing, which Keurig will continue to control, while the remaining $3 billion will be allocated to convertible preferred stock to support the transaction.
The deal comes amid volatility in global coffee prices due to droughts in Brazil and Vietnam and trade uncertainty in the U.S. Moody’s had previously warned that the merger could heighten leverage risks, but analysts said the new capital injection would help mitigate those concerns.
Keurig expects net leverage to decline to 4.6 times adjusted profits following the investment and aims to maintain investment-grade credit ratings for both its beverage and coffee units. The company is also exploring asset sales, new investments, and a potential partial IPO of the beverage business.
CEO Tim Cofer said the company is acting on shareholder feedback following pushback over the deal, emphasizing that the enlarged platform will strengthen its ability to manage tariffs and commodity price swings. Meanwhile, Keurig’s board has begun searching for a CEO to lead the standalone coffee business, as CFO Sudhanshu Priyadarshi steps away from consideration for the role.
Keurig now expects full-year 2025 net sales to grow in the high single digits, up from its previous mid-single-digit guidance. Third-quarter revenue reached $4.31 billion, surpassing analyst expectations of $4.15 billion, according to LSEG data.
Source: Reuters
