Keurig Dr Pepper to Acquire Peet’s in $18 Billion Deal

Business|Keurig Dr Pepper to Acquire Peet’s in $18 Billion Deal

Keurig Dr Pepper said Monday that it would acquire the European coffee company JDE Peet’s for roughly $18 billion in the latest mega deal by food companies trying to stay a step ahead of changes in consumer demand.

After completing the all-cash acquisition, Keurig Dr Pepper plans to combine its coffee business, which includes its namesake single-serve coffee pods, with JDE Peet’s and spin it into a new company. Keurig Dr Pepper would leave behind its mammoth beverage business, whose brands include not only Dr Pepper but Sunkist, Snapple, 7UP and others.

Keurig Dr Pepper said the deal, which would need to be approved by shareholders and regulators, was expected to be finalized in the first half of 2026. If the deal were to break down, JDE Peet’s would owe Keurig Dr Pepper a termination fee of more than $180 million.

The two-step transaction is aimed at effectively undoing the multibillion-dollar combination of Keurig and Dr Pepper announced in 2018. That deal was meant to create a beverage giant with the capacity to distribute hot and cold drinks to customers, while saving money.

But in the past several years, the coffee industry has slowed significantly, amid surging coffee bean prices and softening demand. As a result, the coffee business has become a drag for Keurig Dr Pepper.

The deal with JDE Peet’s would create “two sharply focused beverage companies with attractive and tailored growth propositions,” Tim Cofer, the chief executive of Keurig Dr Pepper, said in a statement. Rafa Oliveira, the head of JDE Peet’s, said the deal marked “a new era of coffee innovation.”

A number of food companies have announced or considered deals in recent years.

In July, the Italian candy company Ferrero said that it would acquire the cereal giant WK Kellogg in a $3.1 billion deal. Kraft Heinz, a behemoth with $26 billion in annual revenue and a portfolio of condiment, lunch meats and frozen potato brands, has been weighing its own deal to break up a merger announced in 2015.

Keurig Dr Pepper’s chief executive warned during the company’s earnings call last month that it expected the company’s coffee business to remain “subdued” because of the effects of inflation, tariffs and consumer uncertainty. Sales at its U.S. coffee division declined slightly in the quarter ending June 30, to $948 million.

Droughts in Brazil and Vietnam, two of the biggest coffee exporters in the world, have resulted in smaller harvests and driven up prices. On top of that, this month President Trump imposed a 50 percent tariff on coffee imported from Brazil.

Consumers are paying significantly more for their caffeine fixes than they did a year ago. At the end of July, the average price of one pound of ground roast coffee in the U.S. was $8.41, up 33 percent the same time last year, according to the U.S. Bureau of Labor Statistics.

Keurig Dr Pepper’s soda business, in contrast, has done extremely well with the sale of flavors like cherry, cream soda and blackberry. In the latest quarter, sales in its beverage division surged 10.5 percent to $2.7 billion from a year earlier.

Based in the Netherlands, JDE Peet’s has cobbled together nearly 50 coffee and tea brands from all over the world, including L’Or from France, Jacobs coffee from Germany and Ti Ora tea from New Zealand. In the first half of this year, sales at JDE Peet’s rose 19.8 percent, to just under $6 billion, due largely to price increases.

The JDE Peet’s chief executive, Mr. Oliveira, told analysts in July the company was better positioned than many of its American competitors to weather the impact of tariffs, because less than 30 percent of coffee it uses comes from Brazil.

Executives also said the company was looking to simplify its portfolio, divesting some units and focusing on a smaller number of brands that they believe are best placed “to meet both current and emerging consumer needs.”