Keurig is getting bought for $92 a share, stock jumps 75% (GMCR, KO, SODA)

Keurig Green Mountain, which makes the Keurig coffee brewers and K-cups, is being acquired by JAB Group for $92 a share.

This deal values the company at $13.9 billion.

Shares of Keurig closed Friday at $51.70 a share, making this acquisition price a 78% premium to the stock's most recent close.

In pre-market trade on Friday shares of Keurig were up as much as 75%. 

Shares of Keurig had lost about 60% of their value year-to-date, and the stock had lost about two-thirds of its value since it reached an all-time split-adjusted high of around $150 per share in November 2014.

According to the release, JAB is acquiring Keurig in partnership with strategic minority investors who are already shareholders in Jacobs Douwe Egberts B.V., including Mondelēz International and entities affiliated with BDT Capital Partners.

Keurig will continue to operate independently and remain headquartered in Vermont.

Coca-Cola CEO Muhtar Kent said his company was "fully supportive" of the deal. Coke owns 17% of Keurig.

In recent months, the major battle for Keurig has been getting the company's new Keurig Kold brewing system off the ground. Keurig Kold brews cold drinks and was seen as a major competitor to SodaStream, but early reviews of the machine were not positive given the unit's size and cost.

And the challenges associated with Keurig Kold followed a disastrous rollout of Keurig's 2.0 unit, which could brew a whole pot of coffee.

Back in May, Keurig said the performance of its 2.0 brewing system had led to disappointing sales, with CEO Brian Kelley saying at the time that the company was "taking actions to reduce brewer inventories, enhance our 2.0 brewer packaging to better communicate our extensive brand variety, and step up innovation on our owned brands."

Here's the full buyout announcement from Keurig:

WATERBURY, Vt.--(BUSINESS WIRE)--Keurig Green Mountain, Inc. (Keurig Green Mountain) (NASDAQ:GMCR), a personal beverage system company that has revolutionized the way consumers create and enjoy beverages, and JAB Holding Company (“JAB”) today announced that the companies have entered into a definitive merger agreement under which a JAB-led investor group will acquire Keurig Green Mountain for $92.00 per share in cash, or a total equity value of approximately $13.9 billion. The agreement, which has been unanimously approved by Keurig Green Mountain’s Board of Directors, represents a premium of approximately 77.9% over Keurig Green Mountain’s closing stock price on December 4, 2015.

JAB is acquiring Keurig Green Mountain in partnership with strategic minority investors who are already shareholders in Jacobs Douwe Egberts B.V., (“JDE”), including Mondelēz International and entities affiliated with BDT Capital Partners. At the close of the transaction, Keurig Green Mountain will be privately owned and will continue to be operated independently by the company’s management team and employees. Keurig Green Mountain will remain headquartered in Waterbury, VT.

Bart Becht, Chairman at JAB commented, “Keurig Green Mountain represents a major step forward in the creation of our global coffee platform. It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single serve machine. Keurig Green Mountain will operate as an independent entity to ensure it will further build on its coffee & technology strength and continue to serve all its partners to the best of its abilities.”

Brian Kelley, President and CEO of Keurig Green Mountain commented, “This transaction will deliver significant cash value for our shareholders and offers an exciting new chapter for our customers, partners and employees by combining Keurig Green Mountain with JAB’s global coffee platform. JAB fully supports Keurig Green Mountain’s culture and values as we continue to pursue our commitment to deliver innovative beverage solutions for consumers at the touch of a button.”

“The Coca-Cola Company is fully supportive of this transaction,” said Muhtar Kent, Chairman and CEO, The Coca-Cola Company. “We have enjoyed a strong partnership with Keurig Green Mountain, and will continue our collaboration with JAB in order to capitalize on the growth opportunities in the single-serve, pod-based segment of the cold beverage industry. We look forward to working with JAB, an experienced operator with a successful track record of investing in and growing consumer companies.”

Irene Rosenfeld, Chairman and CEO of Mondelēz International, commented, “Keurig Green Mountain is a strategic asset that provides immediate access to the U.S., the largest coffee market in the world, and to on-demand, the fastest growing segment of the market. By leveraging our existing investment in JDE and not contributing incremental capital, we have the opportunity to diversify our participation in the global coffee category, while continuing to invest in our core snacking business to deliver significant value for our shareholders over the long term.”

Transaction Details

The transaction is not subject to a financing condition and is expected to close during the first calendar quarter of 2016, subject to customary closing conditions, including receipt of regulatory approvals. The transaction requires the affirmative vote of holders of a majority of Keurig Green Mountain’s outstanding shares entitled to vote thereon.

BofA Merrill Lynch and Credit Suisse provided fairness opinions to Keurig Green Mountain.

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