Keurig Green Mountain and Dr Pepper Snapple to Merge

Shares of Dr Pepper Snapple soared more than 36 percent before the opening bell Monday

Famous Vermont coffee roaster and small appliance brand Keurig Green Mountain announced Monday a merger with a Plano-Texas based company behind some of the best-known brands in store drink aisles.

Dr Pepper Snapple Group has more than 50 beverage brands, including Dr Pepper, Snapple, 7UP, Sunkist, Mott’s juices, A&W Root Beer, Hawaiian Punch, Mr & Mrs T drink mixers, Schweppes, Squirt, and Canada Dry.

The new beverage giant will call itself Keurig Dr Pepper, the companies said in a news release.

The announcement said the companies will have combined 2017 revenues of about $11-billion.

Keurig’s CEO, Bob Gamgort, said in a statement that combining hot and cold drink lines will create opportunities to increase exposure for products with growth potential. Gamgort will be based in Burlington, Massachusetts.

"The combination of Dr Pepper Snapple and Keurig will create a new scale beverage company which addresses today’s consumer needs, with a powerful platform of consumer brands and an unparalleled distribution capability to reach virtually every consumer, everywhere," Gamgort wrote.

The companies said the merger will result in a powerful nationwide distribution network, able to reach virtually every consumer, everywhere.

"I think it’s all great news for Vermont," said Gov. Phil Scott, R-Vermont. "It should increase the growth here in Vermont, I think—hopefully we’ll have a piece of that—so it’s all good news."

This isn’t the first time Keurig has gotten involved with the cold beverage sector. Several years ago, before it was sold to a private equity firm, it formed a partnership with Coca-Cola and made a small appliance to produce soda at home. The KOLD platform was not seen as a success, and was discontinued.

"The carbonated beverage space has been in decline for years," said St. Michael’s College business professor Robert Letovsky, who noted that drinks associated with natural, organic, or healthy ingredients seem to be popular with customers right now.

Letovsky said the merger should give the brands extra strength with retailers when it comes to shelf space and pricing.

"If you’re a brand—7Up, Dr Pepper, Keurig—you’ve got to have some stick," Letovsky told necn. "You’ve got to have some leverage, in order to be able to moderate those demands."

Letovsky said he expects a focus on research and development from the combined companies, saying any drink maker needs to be keenly aware of changing consumer tastes.

The transaction is expected to close this spring, according to the news release. Current Dr Pepper Snapple shareholders will receive $103.75 per share in a special cash dividend, and retain 13 percent of the combined company, the announcement said.

The new Keurig Dr Pepper said in its announcement it’ll find $600-million in synergies on an annualized basis by 2021, but there was no word on any specific potential impacts on its New England operations.

The combined company will continue to operate out of their current locations, the news release said.

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