Europe’s JAB Holding Co. is leading a funding round to acquire a majority stake in K-Cup maker Keurig Green Mountain Inc. for $13.9 billion. The deal would give the group a 60% share of North America’s single-serve coffee market.
The buyout involves a 78% premium over Keurig’s Friday closing price.
JAB is the investment vehicle of Germany’s billionaire Reimann family.
Vontobel analyst Jean-Philippe Bertschy says the price represents a “demanding valuation” of about 15 times Keurig’s earnings before interest, taxes, depreciation and amortization (EBITDA).
Keurig shares plummeted by 60% in 2015 after the disastrous rollout of the Keurig 2.0, a coffee machine capable of brewing up to 30 ounces of coffee at a time.
The company also debuted the Keurig Kold, a $369 device capable of making cold carbonated Coca-Cola and other soda flavors at home. Customers have complained about the bulky nature of that device.
On Monday, the stock closed up 72 percent at $88.89, but still remained below JAB’s offer price of $92 per share.
Influential investor David Einhorn of Greenlight Capital and other short-sellers, hold nearly 13 percent of the total Keurig float in a bet the shares would fall further.