Keurig Dr Pepper buys Peet’s for $18 billion and plans split into coffee and beverage companies

Less than a decade after their merger, Keurig and Dr Pepper plan to become separate companies again.

Keurig Dr Pepper said Monday it is buying the owner of Peet’s Coffee for $18 billion (15.7 billion euro). Then it will break itself in two, with one company selling coffee and the other selling cold beverages like Snapple, Dr Pepper, 7UP and energy drinks.

The agreement unwinds the 2018 merger of Keurig and Dr Pepper. Shares of Keurig Dr Pepper fell 11% in afternoon trading Monday.

Investors were concerned about the company’s plan to finance the acquisition with a mix of cash and debt. S&P Global placed Keurig Dr Pepper on a credit watch with negative implications Monday, saying it was concerned about the increase in debt and the complexity of the two-step transaction.

Keurig Dr Pepper CEO Timothy Cofer said the separate coffee and beverage businesses would be more nimble and better able to focus on growth opportunities in their own markets.

“Following the separation, each stand-alone entity will lead its industry with a sharp strategic focus and with operating models that are finely calibrated to their unique categories and markets,” Cofer said Monday during a conference call with investors.

The combination with Peet’s parent JDE Peet’s, which is based in Amsterdam, significantly expands Keurig’s presence beyond North America, where it’s known for its single-serve coffee machines. JDE Peet’s owns the brands L’OR, Jacobs, Douwe Egberts, Kenco, Pilao, OldTown, Super and Moccona.

Cofer said the combined coffee business will generate $16 billion in annual net sales. The combined buying power will help Keurig and Peet’s compete with other large coffee players like Nestle and Starbucks, especially as rising demand and poor weather conditions push coffee prices near record highs.

Cofer said the coffee company will also be able to focus on meeting demand, especially in developing markets. Around 40% of the company’s sales will come from North America, 40% from Europe and 20% from emerging markets.

“We like, and I like, the coffee category. Why? It’s huge. It’s ubiquitous,” Cofer said. “Obviously, we’ve up to this point focused on North America. But the global data shows coffee is consistently growing on a volume basis above population.”

The merger could also help the company cushion the impact of U.S. tariffs. President Donald Trump imposed a 50% tariff this summer on most imports from Brazil — the world’s leading coffee producer — for an investigation of its former president, Jair Bolsonaro, a Trump ally.

In a conference call with investors in July, Cofer said the impact of tariffs would be “more prominent” in the second half of this year.

Meanwhile, sales of Dr Pepper’s traditional soft drinks have been slowing as health-conscious consumers look for new alternatives. The newly formed beverage company, with $11 billion in annual sales in the U.S. and Mexico, can continue to pivot to its faster-growing beverages, like the energy drinks Ghost and C4 and the hydration drink Electrolit.

The companies said they expect to save around $400 million over three years because of the merger, which is expected to close in the first half of 2026.

Once the two companies are separated, Cofer will become CEO of the cold beverage business, which will be based in Frisco, Texas. Keurig Dr Pepper’s chief financial officer, Sudhanshu Priyadarshi, will lead the coffee business, which will be located in Burlington, Mass. Its international headquarters will be in Amsterdam.

The deal is the latest big maneuver in the food and beverage industry, which has been trying to keep up with changing consumer tastes.

In 2023, Kellogg Co. split into two companies. Mars bought Kellanova, the owner of snack brands like Pringles, last year. Italian confectioner Ferrero announced in July that it planned to buy WK Kellogg, the cereal company.

Struggling Kraft Heinz has also been considering a split.

Companies have also been snapping up fast-growing brands. Keurig Dr Pepper’s rival PepsiCo acquired the prebiotic soda brand Poppi in March to gain a foothold in the fast-growing functional beverage space. And in July, Keurig Dr Pepper acquired Dyla, a maker of powdered drink mixes and water enhancers.

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