Keurig Dr Pepper (KDP) is a major beverage company operating in North America, known for its wide range of popular drink brands. The company's portfolio features well-known names such as Keurig, Dr Pepper, Canada Dry, Mott’s, A&W, Snapple, 7UP, Green Mountain Coffee Roasters, GHOST, Clamato, Core Hydration, The Original Donut Shop, and the Keurig brewing system. KDP’s business model covers the entire beverage supply chain: manufacturing, marketing, distributing, and selling both hot and cold drinks, as well as single-serve brewing systems.
The company’s operations are divided into three primary segments. The largest is the U.S. refreshment beverages segment, accounting for nearly two-thirds (63.9%) of total revenue. This division is responsible for the production and distribution of concentrates, syrups, and finished beverages stamped with the company’s own brands and those of third parties. These products are sold to bottlers, distributors, retailers, and directly to consumers. The U.S. coffee segment, representing 22.77% of revenue, focuses on single-serve brewers, coffee pods, specialty coffee (both hot and iced), and ready-to-drink coffee. The remaining 13.33% of revenue comes from KDP’s international segment, which includes sales in Canada, Mexico, the Caribbean, and other overseas markets.
KDP’s stock is currently valued at $26.59 per share, giving the company a market capitalization of $36.11 billion. While information about the company’s ownership structure is not detailed in the article, it’s important to note that corporate control and shareholder influence have been significant topics in KDP’s recent history.
A major turning point for the company came in January 2018, when Dr Pepper Snapple Group and Keurig Green Mountain merged. This merger created a beverage powerhouse, uniquely positioned to tap into both the hot and cold beverage markets across North America. The deal offered investors exposure to growth areas in both segments, but it also introduced a number of challenges, particularly related to integrating the two companies and realizing expected synergies.
Following the merger, JAB Holdings, the previous owner of Keurig, emerged as the majority shareholder of the newly formed KDP. This shift dramatically reduced the influence of Dr Pepper shareholders, who found themselves holding just a 13% stake in the combined company, while JAB affiliates filled a majority of board seats. However, this balance of power began to change in 2024 as JAB started divesting its holdings in KDP, eventually reducing its stake to 4.4%. As a result, three JAB-affiliated directors resigned from the board, paving the way for other shareholders to regain influence over the company’s direction.
With JAB’s control waning, some shareholders began advocating for the separation of KDP’s beverage and coffee businesses. They believed that splitting the company would unlock greater value, allowing the distinct businesses to pursue their own growth strategies and appeal to different investor bases. Management responded to these calls, but in a way that surprised and unsettled investors: rather than simply spinning off the coffee business, KDP announced a planned merger with JDE Peet’s, a prominent coffee and tea company.
This move was particularly controversial because JAB Holdings owns a controlling 68% stake in JDE Peet’s. The announced deal involved combining KDP’s coffee business, including Keurig, with JDE Peet’s, and then separating the beverage and coffee assets into distinct companies. The structure of the transaction raised eyebrows: instead of a straightforward spin-off or tax-efficient Reverse Morris Trust (which would have allowed KDP to separate its coffee business by merging it with JDE Peet’s in a shareholder-friendly way), KDP opted for an all-cash acquisition with a significant premium attached. The deal would be financed by an $18.5 billion loan, pushing the company’s leverage-to-earnings ratio above 5x by 2026.
The market reacted negatively to this announcement. KDP’s shares dropped by 25%, reflecting investor concerns not with the idea of separating the business, but with the specific structure of the deal. Investors felt the transaction was designed to benefit JAB Holdings, rather than KDP’s broader shareholder base. Many believed that a Reverse Morris Trust would have been a simpler, more economical, and tax-advantaged way of achieving the desired separation