On December 22, 2015

Keurig going private in $13.9 billion deal

By Elizabeth Hewitt, VTDigger.org

A private equity firm will acquire Keurig Green Mountain in a $13.9 billion deal.

The Vermont-headquartered company, which specializes in single-serve coffee machines, announced the deal Monday, Dec. 7, with an investor group headed by JAB Holding Co.

JAB is already involved in several major coffee and beverage companies. The private firm holds the controlling stakes in Jacobs Douwe Egberts, Peet’s Coffee & Tea and Caribou Coffee Company.

The deal comes after a rocky period for Keurig. The Wall Street Journal reports that in the last year, stock had fallen by 61 percent. In August, the company laid off 200 employees from the Waterbury plant.

Under the deal, JAB will purchase Keurig for $92 per share — which amounts to a 78 percent increase over the closing price, according to the company’s announcement.

Stock closed out Friday, Dec. 4, at around $52, and is currently trading at $89 per share.

In a statement, Brian Kelley, president and CEO of Keurig, said that the sale will “deliver significant cash value” for shareholders, and that he expects the deal will lead to “an exciting new chapter,” allowing the company to collaborate with JAB’s other coffee producers.

“JAB fully supports Keurig Green Mountain’s culture and values as we continue to pursue our commitment to deliver innovative beverage solutions for consumers at the touch of a button,” Kelley said.

Gov. Peter Shumlin issued a statement in the wake of the announcement that he had been in touch with Kelley and had been assured that the company will continue to be headquartered in Waterbury.

“That is incredibly good news,” Shumlin said. “Keurig Green Mountain has been an important part of Vermont’s economy, culture, and history for decades.”

Ultimately, the governor hailed the deal.

“Whenever there is news like this about a major employer in Vermont, there is always apprehension,” Shumlin said. “But after my conversations this morning, I am confident that today’s news represents an opportunity for Keurig Green Mountain… There is significant opportunity in taking the company private. Importantly, it will now be easier for the company to avoid the whims of Wall Street and focus on long-term growth, which will be good for the company, the employees, and Vermont.

Today’s news represents a new chapter in the incredible success story of Green Mountain Coffee in Vermont. It is a chapter that I believe will help the company continue to grow, thrive, and make the world’s best coffee right here in Vermont.”

Keurig, which started as Green Mountain Coffee Roasters in 1981, has also been a regular recipient of Vermont’s incentives for job creation since 2007. Under the Vermont Employment Growth Incentive, or VEGI, the company has been approved for more than $7.7 million in four separate payouts.

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