Keurig Dr Pepper announces $7B investment and leadership changes for separation

Keurig Dr Pepper (KDP) announced new details about strategy, leadership and financing related to the acquisition of JDE Peet’s and subsequent planned separation into two independent companies. KDP updated its financing package related to the acquisition, now including two new strategic investment agreements totaling $7B, co-led by funds managed by affiliates of Apollo (APO), and funds and accounts managed by KKR (KKR). As a result, the company now projects net leverage will be ~1.0x lower at 4.6x upon acquisition close, expected in the first half of 2026, with estimated adjusted EPS accretion of ~10% in the first full year. The company announced a binding commitment letter and term sheet for a $4B investment in a newly formed K-Cup pod and other single-serve manufacturing joint venture co-led by Apollo and KKR, with participation from Goldman Sachs Alternatives. KDP will retain a controlling interest and operational control of the related assets. Over the next 10 years, the all-in cost of this capital is expected to be approximately 7.3%-7.4%. Additionally, the company announced a definitive agreement for a $3B convertible preferred stock investment in the company and the eventual Beverage Co., co-led by KKR and Apollo. The key terms of this preferred stock include an initial conversion price of $37.25 per share, a 41% premium to the company’s 20-day VWAP ending on October 24, and a 6% premium to the company’s last closing share price. The agreements are subject to customary closing conditions for agreements of this type. The company also announced intended capital structures for Beverage Co. and Global Coffee Co. upon separation, with targeted net leverage ratios at separation set at approximately 3.5-4.0x and 3.75-4.25x, respectively. KDP is evaluating further options to accelerate deleveraging and achieve these targets, including potential non-core asset sales and other cost-efficient strategic capital investments. The company plans to nominate Brian Driscoll for election to its Board of Directors at the Company’s next annual meeting. The company plans to be operationally ready to separate into two independent entities by the end of 2026 based on the achievement of key milestones, including the naming of leadership teams and independent Boards of Directors for both companies. Tim Cofer will continue to serve as KDP’s CEO until the intended separation is completed and will then become CEO of Beverage Co. The KDP Board of Directors has initiated an internal and external search for the future CEO of Global Coffee Co.; Sudhanshu Priyadarshi will no longer assume this future role. Priyadarshi continues to serve as KDP’s CFO and President, International.