GMCR (MM)

By Anne Steele 

Keurig Green Mountain Inc. agreed to get bought by an investor group led by JAB Holding Co. for $13.9 billion, a sizable premium for the maker of coffee pods and machines that has seen its sales and stock price slump over the past year amid product woes and increased competition.

The deal values Keurig at $92 a share, a 78% premium to the company's closing price Friday. Shares of Keurig, known for its single-serve coffee cups and machines, jumped 73% to $89.52 in midday trading in New York. Before that, the stock had fallen 61% over the past year.

The deal connects Keurig with other coffee makers. JAB is acquiring Keurig in partnership with strategic minority investors who are already shareholders in Jacobs Douwe Egberts B.V., including Mondelez 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. The company's management team and employees will remain in place at the Waterbury, Vt., headquarters.

The deal, expected to close by April, was unanimously approved by Keurig's board. It still requires the support of Keurig shareholders.

Coca-Cola Co., which owns about 17% of Keurig, said in the news release that it is fully supportive of this transaction. The soda giant spent $2.4 billion between February 2014 and February 2015 building its stake in Keurig, as part of a 10-year deal to feature Coke's products in Keurig's cold-beverage brewing machine.

According to FactSet, Coke owns 25.87 million Keurig shares, which would be valued at about $2.4 billion under the deal announced Monday.

Coke's shares fell 25 cents to $43.04 in midday trading in New York.

Keurig has stumbled over the past year. It struggled with rollout of its next generation hot brewers as consumers were frustrated that the new coffee makers didn't work with Keurig's signature K-Cups. More recently, the company is facing pressure with its first cold-drink machine, which faces skepticism from analysts who say the so-called Kold machine is too bulky, expensive and slow.

Through the year ended Sept. 26, Keurig's sales fell 4% to $4.52 billion, while its profits tumbled 16% to $498 million.

JAB is overseen by three senior partners, Peter Harf, Bart Becht and Olivier Goudet, who manage the money of one of Germany's wealthiest families, the Reimann family. But rather than stick the funds in stocks, bonds or real estate, as many family-money managers do, these men buy consumer-goods and fashion companies, most of which are far better known than the investors themselves.

The company's holdings include Peet's Coffee & Tea, shoemaker Jimmy Choo Ltd., and Coty Inc., home to nail-polish maker OPI and other beauty brands.

Kevin Kingsbury contributed to this article.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

December 07, 2015 14:54 ET (19:54 GMT)

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