The Coca-Cola Co. has agreed to acquire a 10 percent minority stake in Green Mountain Roasters, maker of the popular Keurig Single Cup brewing system, for $1.25 billion, according to a joint statement. As part of the deal, Coke and Green Mountain have signed a 10-year exclusive arrangement in which the cola giant will launch a Coke-branded line of pod-based, single-serve beverages for use in the Green Mountain’s forthcoming Keurig Cold at-home beverage system.
While the purchase will give Coke a foothold in the fast-growing market for pod-based products, the deal is especially significant for Green Mountain, which has landed the world’s biggest beverage company as a partner for its Keurig Cold system. The new system, scheduled for launch in 2015, will allow consumers to create a variety of cold beverages at home, including carbonated drinks, enhanced waters, juice drinks, sports drinks and teas, according to the statement.
“By pairing The Coca-Cola Company’s brand leadership and global footprint with [Green Mountain's] innovative technology, together we will be able to capitalize on the many exciting growth opportunities in the single-serve, pod-based segment of the cold beverage industry,” said Coke Chairman and CEO Muhtar Kent. “Importantly, this partnership provides our consumers with a convenient way to enjoy the brands they love through in-home preparation.”
The deal sent Green Mountain shares soaring by over 30 percent in after-hours trading. Meanwhile, Soda Stream, which manufactures a line of at-home carbonation devices – and taken direct aim at Coke and PepsiCo in its marketing efforts — saw its share price plummet by over 10 percent.
With an expected close date in March, Green Mountain plans to initiate a share repurchase program that the company hopes will alleviate dilution created by the newly issued shares.