Keurig Green Mountain, the maker of coffee pod machines, planned to buy the Dr. Pepper Snapple Group in an $18.7 billion deal. Keurig would merge with Dr. Pepper Snapple and create a new firm called Keurig Dr. Pepper. Also, shareholders of Dr. Pepper Snapple would get a cash dividend of $103.75 per share, which is about 8% higher than Dr. Pepper Snapple’s closing share price on Friday. The transaction would be finished by June 30.
This acquisition would cause a huge impact on the soft drink market. Since Keurig Green Mountain is the maker of coffee pod machines, it would raise the chance that the new company would launch the new pods which could eventually allow customers make soft drinks at home just like how people make coffee by coffee pod. We will see if this would really happen and if the acquisition is worth.
3 comments:
This acquisition is quite interesting to me since I see both companies as offering quite dated products and are in need of some sort of innovation in order for their companies to succeed. Keurig was a hot product a couple years ago and I see it as more of a fad, with there being countless other coffee products similar to it on the market. Additionally with respect to Dr. Pepper, more and more people are straying away from consuming soda due to wider public awareness of its health repercussions. I do not think at this point this deal will make a massive impact on the market if they do not attempt to invest their resources greater in R&D.
I agree with Amy, but I would add that along with the Keurig's age and the health repercussions with Dr. Pepper, environmental concerns have risen in the public's eye and are continuing to gain attention. The Keurig's individual pod concept increases waste from the traditional coffee-pot method of coffee brewing and plastic bottles are one of the largest sources of waste. However, I wonder what the environmental trade offs would be if this transaction eventually allows Dr. Pepper to produce pods allowing their customers to make soft drinks at home. Will this reduce the amount of plastic bottles in landfills or will it increase the number of plastic pods in landfills? In addition, soda stream machines already exist, so I wonder if the possibility of the new combination of hot and cold drinks would actually have much demand.
Like Sarah noted, Keurig's concept is under a lot of scrutiny because of its clear lack of environmental consideration. Many people are attracted to Keurig's ease of use and instant gratification. However, Keurig customer's often realize that their actions are causing a lot of harm. With this new merger the companies might be better off pooling their resources to come up with a new product that aims for environmental sustainability. It would be interesting to see if the two companies could come up with some sort of biodegradable version of the product that functions well as both a traditional K-cup and something that would enable a soft drink function as well. If they were able to create such a product it would totally reshape the industry.
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