Global snack and confectionery company Mondelēz International will be a minor stakeholder in the recently announced merger between coffee company Keurig Green Mountain and packaged beverage company Dr Pepper Snapple Group. Mondelēz’s stake in the combined company, which will be known as Keurig Dr Pepper, will be just 13-14%, but the investment gives Mondelēz an inside track to monitor the performance of the new beverage company. As a minority shareholder, Mondelēz has an advantageous position that could eventually turn into an opportunity to perhaps one day increase its investment in or acquire the combined beverage company.
The future potential of an increased stake in Keurig Dr Pepper could help Mondelēz broaden its business beyond globally renowned snack and confectionery brands. If the company chooses to become a majority shareholder or outright purchase Keurig Dr Pepper in the future, Keurig Dr Pepper’s brands and business would give Mondelēz a more dynamic portfolio that could compete against Nestlé, PepsiCo and other multinational cross-category food and drink corporations. In particular, Keurig Dr Pepper would allow Mondelēz to re-enter the fast-growing global coffee market and also to leverage Dr Pepper Snapple’s partnerships with emerging ready-to-drink beverage brands.
Mondelēz is part of the merger between Keurig Green Mountain and Dr Pepper Snapple Group because of an existing stake in Keurig Green Mountain. In 2016, Mondelēz exchanged a portion of its ownership in coffee-focused company Jacobs Douwe Egberts for a 24% ownership stake in the privately held Keurig Green Mountain. Mondelēz’s 24% stake will be transferred to 13-14% in the new Keurig Dr Pepper. Interestingly, Mondelēz’s share will be equivalent to the 13% ownership stake in the new company that Dr Pepper Snapple will have.
Any increase in ownership or potential takeover bid is speculation at this time. Thus far, Mondelēz has only filed a statement with US regulatory authorities that it will not invest its own capital in Keurig Dr Pepper. Although it does not plan to invest its own funds in Keurig Dr Pepper, the minority ownership stake provides Mondelēz with a beneficial position from within Keurig Dr Pepper to monitor the progress of the new beverage company and have first mover advantage for any future business potential Keurig Dr Pepper might present.
