Episode summary
Keurig Dr Pepper to Buy Peet’s Coffee Owner for $18 Billion in Revamp | Bloomberg Intelligence
Bloomberg Intelligence
· · 23 min · Hosts: Paul Sweeney, Alexis Christoforous · Guests: Kenneth Shea, Poonam Goyal, Anurag Rana, Jennifer Rie
Summary
Keurig Dr Pepper is using a two-step restructuring to address a lagging coffee business: it will buy JDE Peet’s for 15.7 billion euros and then split its coffee and cold-beverage operations into two independent US-listed companies. Kenneth Shea said the deal pairs a weak U.S. K-Cup franchise, pressured by higher green coffee costs, Brazil tariffs and slowing pod demand, with JDE Peet’s scale as the world’s No. 2 coffee producer behind Nestle.
Shea argued the cold-beverage side remains strong, supported by national distribution and brands like Dr Pepper and Canada Dry, while the coffee business has become a drag. He also said coffee inflation and weak crops have pushed up retail prices, encouraging some consumers to shift toward energy drinks and other cheaper cold categories. The takeaway was that Keurig is choosing a tax-efficient divestiture rather than trying to sell the coffee unit at a low multiple.
The episode also covered Puma, where Poonam Goyal said the Pinault family is exploring a sale after two years of pressure, weaker wholesale execution and the loss of shelf space as Nike returned to wholesale. She said Puma’s strength is in smaller sports and niche endorsements, but it lacks the scale and marketing firepower to match Nike or Adidas. The final segment said Nextstar’s $6.2 billion cash bid for Tegna could clear regulators because FCC ownership rules are being rewritten and DOJ merger policy has become more flexible under the Trump administration.
Key takeaways
- Kenneth Shea said Keurig Dr Pepper is separating coffee from cold drinks because the coffee unit has been hurt by tariffs, weak pod demand and rising bean costs.
- Shea said the cold-beverage business is still performing well because national distribution and brands like Dr Pepper and Canada Dry remain strong.
- Poonam Goyal said Puma is under pressure because Nike’s return to wholesale has reduced Puma’s shelf space and visibility.
- Goyal said Puma has some strength in niche sports like cricket and racing, but not enough scale to compete head-on with Nike and Adidas.
- Jennifer Rie said the Nextstar-Tegna deal has a better regulatory path now because FCC ownership limits and DOJ enforcement have both shifted.
- Rie said more deals may follow if tariffs calm down and companies see a clearer route to approval without extended court fights.
Notable quotes
“this two-step deal basically addresses um a lagging division they've had, the Kurig coffee business”
“the the cold beverage side is doing really well, whether it's Coke or Pepsi or uh Cure Dr. Pepper”
“coffee beans are essentially sourced from Brazil. So to some degree the roasters are hostage to good crops”
“Puma's come under a lot of pressure in the last two years, especially since they lost their CEO to Adidas just about 2 years ago”
“I think so. And I think it would have already picked up if we didn't have so much tariff uncertainty”
How the episode opens
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Merger Monday. Another M&A trade. I like to see it.
This time, Kurick, Dr. Pepper agreed to buy JD Pete for 15.7 billion euros to bolster its struggling coffee business. They're not done.
Then Curry Dr. Pepper will separate its coffee and beverage units into two independent USlisted companies once the deal is completed. All I hear is the cash register ringing for the bankers and lawyers.
Um let's see what's going on here. Ken Shay joins us, senior consumer analyst at Bloomberg Intelligence Safely, Wisconsin down there in our Princeton uh campus. Ken, talk to us about Kurig, Dr.
Pepper. What are they trying to do here?
Yeah, hi Paul. So, this two-step deal basically addresses um a lagging division they've had, the Kurig coffee business. You know, it's it's cold beverage business uh namely Dr.
Pepperm uh Canada dry doing is doing really well. Whereas the car coffee business really has uh been a lagard over the last couple years now that you have higher green coffee uh cost. You have a you know 50% tariffs coming in from Brazil namely coffee beans.
Um slow demand for atome you know pod uh business you know the ubi ubiquitous K cups and it it really has painted a dismal picture for that division in the second half. So rather than try to sell it and I don't know if they try to do that but rather than try to do that at a low multiple what they're trying to do cleverly is team it up with JDE Pets which is the number two coffee producer in the world behind only Nestle but mostly big in Europe and uh you know attach the US essentially US business the K cup business together and you have you know a pretty good pretty good entity.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- consumer staples m&a
- coffee market restructuring
- e-commerce retail
- iphone redesign
- media acquisition antitrust
Companies and tickers mentioned
- KDP
- PUMSY
- AAPL
- NXST
- Keurig Dr Pepper
- JDE Peet's NV
- Puma SE
- Apple
- Tegna
- Nexstar Media Group
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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