Keurig Dr Pepper Stock Drops. It Is Buying JDE Peet’s for $18B to Create a New Public Coffee Titan.

Bottles of Keurig Dr Pepper Inc. soft drinks are displayed for sale at a grocery store (Luke Sharrett/Bloomberg)

Keurig Dr Pepper has agreed to buy Peet’s Coffee parent company JDE Peet’s for $18 billion in cash. It’s part of a bigger plan to spin off Keurig’s coffee brands to a separate company.

After the deal closes, Keurig plans to separate into two independent, U.S.-listed companies and create “the world’s #1 pure-play coffee company,” it said early Monday.

Keurig will pay shareholders of Amsterdam-listed JDE Peet’s €31.85 per share ($37.30), a roughly 18% premium to Friday’s closing price. JDE Peet’s will also pay a previously disclosed dividend of €0.36 per share before the deal closing, with no reduction to the offer price.

The deal and subsequent spinoff would effectively unwind coffee machine maker Keurig’s $19 billion acquisition of Dr Pepper Snapple Group announced in 2018. Keurig’s shares have risen 84% since early 2018, trailing the S&P 500 , which is up about 130% over the same period.

By Friday’s close, JD Peet’s had seen its stock drop some 30% since it first began trading at the Euronext exchange in Amsterdam in 2020. Shares jumped 17% to €31.06 on Monday morning.

Investors appear to have concerns about the deal. Keurig stock dropped 7.6% to $32.48 just after the market opened, which would be the largest single-day drop since March 2020 according to Dow Jones market data. By comparison, the Dow Jones Industrial Average index slipped 0.3% and the S&P 500 index lost futures had declined 0.2%.

Write to Elsa Ohlen at elsa.ohlen@barrons.com