Goldman Sachs & Co. LLC served as lead financial advisor to Keurig. BDT & Company, AFW LP, J.P. Morgan Securities LLC and Bank of America Merrill Lynch also acted as financial advisors to Keurig with Skadden, Arps, Slate, Meagher & Flom LLP serving as legal counsel and McDermott Will & Emery LLP serving as tax counsel. Credit Suisse served as financial advisor to Dr Pepper Snapple and Morgan, Lewis & Bockius LLP is serving as Dr Pepper Snapple’s legal advisor. Clifford Chance U.S. LLP is serving as legal advisor to Mondel?z International.
Dr Pepper Snapple Group, Inc. (NYSE: DPS) and Keurig Green Mountain, Inc. (“Keurig”) have entered into a definitive merger agreement to create Keurig Dr Pepper (“KDP”), a new beverage company of scale with a portfolio of iconic consumer brands and unrivaled distribution capability to reach virtually every point-of-sale in North America. Under the terms of the agreement, which has been unanimously approved by the Dr Pepper Snapple Board of Directors, Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend and retain 13% of the combined company.
KDP will have pro forma combined 2017 annual revenues of approximately $11 billion. This combination of two iconic beverage companies joins together beloved brands Dr Pepper, 7UP, Snapple, A&W, Mott’s and Sunkist with leading coffee brand Green Mountain Coffee Roasters and the innovative Keurig single-serve coffee system, as well as more than 75 owned, licensed and partner brands in the Keurig system.
Under the terms of the merger agreement, Dr Pepper Snapple shareholders will receive a special cash dividend of $103.75 per share and will retain their shares in Dr Pepper Snapple. Upon closing of the transaction, Keurig shareholders will hold 87% and Dr Pepper Snapple shareholders will hold 13% of the combined company.
JAB Holding Company, a global investment firm with a proven track record of investing long-term capital in global consumer brands, and its partners, will together make an equity investment of $9 billion as part of the financing of the transaction. JAB will be investing equity capital from JAB Holding Company as well as through JAB Consumer Fund, an investment fund backed by a group of like-minded, long-term oriented investors. Both JAB Holding Company and JAB Consumer Fund are overseen by three senior partners: Peter Harf, Bart Becht and Olivier Goudet. Entities affiliated with BDT Capital Partners, a Chicago-based merchant bank that provides long-term private capital and advice to closely held companies, are also investing alongside JAB. Upon closing of the transaction, JAB will be the controlling shareholder. Mondelez International, JAB’s partner in Keurig, will hold an approximately 13-14% stake in the combined company.
The balance of the transaction financing will be provided through financing debt commitments from JPMorgan Chase Bank, Bank of America Merrill Lynch and Goldman Sachs. The transaction is not subject to a financing condition and is expected to close in the second calendar quarter of 2018, subject to the approval of Dr Pepper Snapple shareholders and the satisfaction of customary closing conditions, including receipt of regulatory approvals.
Morgan Lewis advised Dr Pepper Snapple Group, Inc. with a team led by Charles Engros and Jonathon Morris and associates James Fang and Elin Lassen
The Skadden team includes: M&A partners Sean Doyle (Picture), Paul Schnell and Maxim Mayer-Cesiano, and associates Robert Banerjea, Dohyun Kim and Jocelyn Dicker; Banking partner Steven Messina and associate David Passes; Capital Markets partner Laura Kaufmann Belkhayat; Executive Compensation and Benefits partner Erica Schohn; Intellectual Property and Technology partner Bruce Goldner; Labor and Employment Law partner David Schwartz; and Antitrust and Competition partner Matthew Hendrickson. All of the attorneys are based in New York.
Involved fees earner: Charles Engros – Morgan Lewis; Jonathan Morris – Morgan Lewis; James Fang – Morgan Lewis; Sean Doyle – Skadden Arps Slate Meager & Flom; Paul Schnell – Skadden Arps Slate Meager & Flom; Maxim Mayer-Cesiano – Skadden Arps Slate Meager & Flom; Robert Banerjea – Skadden Arps Slate Meager & Flom; Dohyun Kim – Skadden Arps Slate Meager & Flom; Jocelyn Dicker – Skadden Arps Slate Meager & Flom; Steven Messina – Skadden Arps Slate Meager & Flom; David Passes – Skadden Arps Slate Meager & Flom; Laura Kaufmann Belkhayat – Skadden Arps Slate Meager & Flom; Erica Schohn – Skadden Arps Slate Meager & Flom; David Schwartz – Skadden Arps Slate Meager & Flom; Bruce Goldner – Skadden Arps Slate Meager & Flom; Matthew Hendrickson – Skadden Arps Slate Meager & Flom;