Keurig Dr Pepper Announces Sale of up to 100 million Shares of Common Stock by JAB and Repurchase of 35 million Shares by KDP

Rhea-AI Summary

Keurig Dr Pepper Inc. (KDP) announces a secondary offering where JAB Holding Company will sell 86,956,522 shares, with an option for an additional 13,043,478 shares. KDP plans to repurchase 35 million shares, and after the offering, JAB will own around 21% of KDP's stock. JAB intends to remain a long-term anchor shareholder in KDP.

Insights

Financial Analyst

The secondary offering of shares by JAB Holding Company s.a.r.l. in Keurig Dr Pepper Inc. (KDP) represents a significant liquidity event and a notable change in the company's capital structure. The repurchase of 35 million shares by KDP under its existing repurchase authorization demonstrates a use of capital that can be accretive to earnings per share, given that repurchases typically reduce the number of shares outstanding, potentially increasing the value of remaining shares. However, the market's response to such transactions can vary, as the dilutive effect of the secondary offering may offset perceived benefits of the repurchase.

Investors should monitor the per share price paid by the underwriter, as it will influence the immediate financial impact of the Repurchase. The remaining $1.8 billion in repurchase authorization provides KDP with continued flexibility in capital management. JAB's intent to remain a long-term anchor shareholder with at least 20% ownership is a strong signal of continued confidence in KDP's prospects, which could be reassuring to other investors.

Market Research Analyst

The transaction details, including the 180-day lock-up agreement, are standard for secondary offerings and prevent JAB from selling additional shares in the short term, thus potentially stabilizing the stock price post-offering. The public float increase to approximately 79% could enhance liquidity in KDP's shares, which is generally favorable for institutional investors. However, it is crucial to analyze the market's reception of the offering and the subsequent trading volume and price action for a comprehensive understanding of the impact.

Furthermore, the interest of KDP's directors and officers in purchasing shares could be interpreted as a positive internal sentiment regarding the company's valuation and future performance. This insider confidence might influence investor perception and can be factored into investment decisions.

Legal Expert

The transaction is subject to regulatory compliance, including the effective registration statement and a prospectus filed with the U.S. Securities and Exchange Commission. The legal framework governing such transactions ensures transparency and provides investors with critical information to make informed decisions. It is essential for investors to review these documents, as they contain detailed information about the offering's terms, risks and the company's financials.

Moreover, the lock-up period is a contractual agreement that helps mitigate the risk of market oversaturation with the company's stock, which can be beneficial for maintaining share price stability post-offering. The legal stipulations surrounding the transaction are designed to balance the interests of the company, the selling shareholder and potential investors.

JAB to Remain Long-Term Anchor Shareholder

BURLINGTON, Mass. and FRISCO, Texas, Feb. 29, 2024 /PRNewswire/ -- Keurig Dr Pepper Inc. (NASDAQ: KDP) today announced that a subsidiary of JAB Holding Company s.a.r.l. ("JAB") will sell an aggregate of 86,956,522 shares through a secondary offering.  JAB has also granted an option to the underwriter to purchase up to an additional 13,043,478 shares for a period of 30 days following the date of this offering.

KDP has indicated its intent to repurchase an aggregate of 35 million shares in this offering (the "Repurchase") at the per share price to be paid by the underwriter in the offering.  The Repurchase is being effected under its previously announced $4 billion repurchase authorization of which approximately $1.8 billion will remain outstanding following the offering. 

As part of the offering, certain directors and officers of KDP have indicated an interest to purchase KDP shares.

Following the completion of the offering, assuming full exercise of the underwriter's option to purchase additional shares, JAB will beneficially own approximately 21% of KDP's outstanding common stock, giving effect to the Repurchase, bringing KDP's public float to approximately 79%.

Joachim Creus, CEO of JAB stated:  "The proceeds from our sale of KDP shares allow us to maintain our leverage target in line with our financial policies, as we continue to build out our investment portfolio.  KDP will continue to be one of our most important investments and we expect to continue to be a long-term anchor shareholder in KDP, at or above the 20% ownership level."

Under the terms of the transaction, the remaining shares beneficially owned by JAB will be subject to a 180 day lock-up agreement with the underwriter. 

Morgan Stanley is acting as the underwriter for the proposed secondary offering.

The offering will be made only by means of an effective registration statement and a prospectus. The Company has previously filed with the U.S. Securities and Exchange Commission (the "SEC") a registration statement (including a prospectus) on Form S-3 (File No. 333-266989) and a prospectus supplement, each dated August 19, 2022, as well as a preliminary prospectus supplement for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement, the accompanying prospectus supplements and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. These documents can be accessed through the SEC's website at www.sec.gov or by contacting Morgan Stanley & Co. LLC, Attn: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Investor Contacts: 
Jane Gelfand
T: 888-340-5287
jane.gelfand@kdrp.com 

Chethan Mallela
T: 888-340-5287
chethan.mallela@kdrp.com 

Media Contact: 
Katie Gilroy
T: 781-418-3345
katie.gilroy@kdrp.com 

About Keurig Dr Pepper

Keurig Dr Pepper (KDP) is a leading beverage company in North America, with annual revenue of more than $14 billion and approximately 28,000 employees. KDP holds leadership positions in liquid refreshment beverages, including soft drinks, specialty coffee and tea, water, juice and juice drinks and mixers, and markets the #1 single serve coffee brewing system in the U.S. and Canada. The Company's portfolio of more than 125 owned, licensed and partner brands is designed to satisfy virtually any consumer need, any time, and includes Keurig^®, Dr Pepper^®, Canada Dry^®, Clamato^®, CORE^®, Green Mountain Coffee Roasters^®, Mott's^®, Snapple^®, and The Original Donut Shop^®. Through its powerful sales and distribution network, KDP can deliver its portfolio of hot and cold beverages to nearly every point of purchase for consumers. The Company's Drink Well. Do Good. corporate responsibility platform is focused on the greatest opportunities for impact in the environment, its supply chain, the health and well-being of consumers and with its people and communities.

FORWARD LOOKING STATEMENTS

Certain statements contained herein are "forward-looking statements" within the meaning of applicable securities laws and regulations. These forward-looking statements can generally be identified by the use of words such as "outlook," "guidance," "anticipate," "expect," "believe," "could," "estimate," "feel," "forecast," "intend," "may," "plan," "potential," "project," "should," "target," "will," "would," and similar words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These statements are based on the current expectations of our management, are not predictions of actual performance, and actual results may differ materially.

Forward-looking statements are subject to a number of risks and uncertainties, including the factors disclosed in our Annual Report on Form 10-K, the prospectus supplements and subsequent filings with the SEC. We are under no obligation to update, modify or withdraw any forward-looking statements, except as required by applicable law.

 

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SOURCE Keurig Dr Pepper

FAQ

How many shares will JAB sell in the secondary offering for KDP?

JAB will sell 86,956,522 shares in the secondary offering for KDP.

What percentage of KDP's outstanding common stock will JAB beneficially own after the offering?

After the offering, assuming full exercise of the underwriter's option, JAB will beneficially own around 21% of KDP's outstanding common stock.

Who is acting as the underwriter for the proposed secondary offering of KDP shares?

Morgan Stanley is acting as the underwriter for the proposed secondary offering of KDP shares.

What is the purpose of JAB's sale of KDP shares?

The proceeds from JAB's sale of KDP shares will allow them to maintain their leverage target and continue building their investment portfolio.

What is the lock-up period for the remaining shares beneficially owned by JAB?

The remaining shares beneficially owned by JAB will be subject to a 180-day lock-up agreement with the underwriter.