Keurig Dr Pepper Inc. (KDP) Strengthens Coffee Business with JDE Peet's Acquisition

Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of the best defensive stocks to buy, according to Steve Cohen. On August 25, the company announced it had reached an agreement to acquire Dutch coffee and tea company JDE Peet’s.

The $18 billion deal is expected to be part of the company’s push to bolster its struggling US Coffee business. In the second quarter, revenue in the coffee business decreased 0.2% to $900 million, primarily due to a decline in shipments of single-serve coffee pods.

With the acquisition, Keurig Dr Pepper is well-positioned to create a global coffee champion through the combination of its North America’s leading single-serve platform with JDE Peet’s portfolio of coffee brands. The acquisition is also expected to create a resilient and diversified global portfolio, in addition to $400 million in expected cost synergies over the next three years.

“Through the complementary combination of Keurig and JDE Peet’s, we are seizing an exceptional opportunity to create a global coffee giant. This is the right time for this transaction, with KDP in a position of operational and financial strength, momentum across our evolving portfolio, and increasing resilience in the coffee category. By creating two sharply focused beverage companies with attractive and tailored growth propositions and capital allocation strategies, we are poised to generate significant shareholder value in both the near and long term,” said Tim Cofer, CEO of KDP.

Keurig Dr Pepper Inc. (NASDAQ:KDP)  is a beverage company that manufactures and distributes a wide array of non-alcoholic drinks, including coffee, soft drinks, teas, water, and juice. Through its combined Keurig and Dr Pepper businesses, KDP offers a range of beverages, including both hot and cold options.

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Disclosure: None. This article is originally published at Insider Monkey.