Keurig Dr Pepper Inc. (KDP) is raising $7 billion from Apollo Global Management and KKR & Co LP to finance its acquisition of JDE Peet's NV, aiming to ease investor concerns over excessive debt.
In August, KDP announced plans to acquire the Dutch coffee company for approximately $18 billion, a move met with skepticism on Wall Street. TD Cowen analyst Robert Moskow noted in a recent report that the deal would increase KDP's leverage and triple its exposure to the coffee category—contrary to investors' hopes for reduced exposure.
On Monday, October 27, KDP shares surged as much as 10% intraday, marking their largest single-day gain since March 2020. Year-to-date through October 24, the stock had fallen 15%.
Under the funding plan, Apollo and KKR will invest $4 billion in a coffee capsule manufacturing joint venture, where KDP will retain majority control. Additionally, the firms will invest $3 billion in KDP's beverage division via convertible preferred shares.
Barclays analyst Lauren Lieberman, who rates KDP "equalweight," stated that the new investments should prevent the merged company's leverage from "impacting operational flexibility or equity valuation."
KDP plans to separate its beverage and coffee businesses by late 2026. During an investor day presentation on October 27, the company projected $400 million in cost savings over three years following the merger with Peet's Coffee, a JDE Peet's brand.
KDP also reported Q3 2025 results, with revenue rising to $4.3 billion, surpassing analysts' average estimate of $4.1 billion. The company raised its full-year constant-currency net sales growth forecast from "mid-single digits" to "high-single digits."
CEO Timothy Cofer noted strong growth in U.S. refreshment beverages and encouraging sequential progress in U.S. coffee, which saw a 1.5% sales increase after 10 consecutive quarterly declines. U.S. beverage sales grew 14%, driven by price hikes and volume gains, with energy drink brand Ghost performing well.
KDP maintained its adjusted EPS growth guidance for the year at "high-single digits."
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