Keurig sold for $14 billion to private-equity firm

Nathan Bomey | USA TODAY

Show Caption Hide Caption Keurig brews deal, GE drops Electrolux plans Keurig Green Mountain has agreed to be acquired by JAB Holding Co. for about $13.9 billion in cash, while General Electric has abandoned plans to sell its appliance business to Electrolux due to U.S. anti-trust regulators.

Keurig Green Mountain, which manufactures coffee makers and instant flavor pods, has agreed to be purchased for $13.9 billion by an investment group led by private-equity firm JAB Holding Co.

The purchasers include the backers of Netherlands-based Jacobs Douwe Egberts, a global tea and coffee company formed in 2014 as the combination of the coffee franchises of Oreo-maker Mondelez International and D.E Master Blenders.

The deal marks a nearly 78% premium over Friday's closing price for Keurig shares. The stock rose 72% to close Monday at $88.89.

The move comes amid slumping sales of the pods and brewers that Keurig made popular. The company has been cutting costs, including slashing 5% of its workforce in August, and introducing products to offset the downturn in its core offerings.

The deal suggests that the paths of Keurig and JAB's other properties — including Jacobs Douwe Egberts, Peet's Coffee & Tea and Caribou Coffee — may intersect as JAB seeks to reverse Keurig's fortunes. JAB said it would operate Keurig (GMCR) as an independent, private subsidiary based in Waterbury, Vt.

The Keurig purchase is likely part of a much bigger global strategy by JAB to "consolidate coffee in Europe and the United States" by becoming a major global player, Susquehanna Financial Group analyst Pablo Zaunic said in a conference call Monday.

Keurig representatives declined to comment on the deal, and JAB did not immediately respond to a request seeking comment.

"Keurig Green Mountain represents a major step forward in the creation of our global coffee platform," JAB Chairman Bart Becht said in a statement. "It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single-serve machine."

Until the deal was announced, Keurig shares had fallen 61% for the year as investors reconsidered the company's growth prospects.

Keurig's revenue fell 13% to $1.04 billion in the fourth quarter ended Sept. 26. That included a 9% drop in the sale of pods, which represented 83% of the company's revenue for the quarter, and a 32% drop in the sale of brewers and accessories.

The Coca-Cola Co., Keurig's largest shareholder, said it is backing the deal, which comes more than two months after the introduction of the Keurig KOLD system, which allows users to make carbonated drinks at home.

The company also recently introduced pods used to create single-serve helpings of Campbell Soup.

Keurig has played a central role in changing the market for coffee brewed at home and in the workplace. The company's pods, which come in many flavors, are inserted into a tabletop Keurig machine, which makes coffee and other beverages such as hot chocolate and tea.

Contributing: Daniel D'Ambrosio, Burlington Free Press

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.