Business News

CCTV Script 30/01/18

— This is the script of CNBC's news report for China's CCTV on January 30, Tuesday.

Keurig Green Mountain announced plans Monday to buy Dr Pepper Snapple, in a deal that creates a new beverage giant with $11 billion in sales and combines the Dr Pepper, 7UP and Keurig's single-serve coffee brands.

The new entity will be 87 percent owned by Keurig shareholders and 13 percent owned by Dr Pepper shareholders.

The deal also gives Keurig access to Dr Pepper's drink distribution network, one of the country's major three. It therefore creates an option down the road for Keurig to shuffle its coffee and other products through its pipeline.

Keurig will also gain access to Dr Pepper's allied brands, a portfolio of healthy and upstart drinks it has invested in and distributes through its network.

Keurig CEO Bob Gamgort will lead the new company, called Keurig Dr Pepper. Larry Young, CEO at Dr Pepper Snapple, will become a director.

[Bob Gamgort Keurig CEO] "So it's not intuitive first, but as people learn about it they are gonna realize this makes total sense. when we put these two beverage companies together, we create North American beverage company scale of 11 billion USD in revenue, we cover all consumer needs states, we get exposure to high-growth areas, and really importantly, we got distribution system they can get those brands, to customers anywhere they shop."

The deal is the latest backed by German privately held conglomerate JAB Holding Company. JAB, which acquired Keurig Green Mountain in 2016, also owns Panera, Caribou Coffee and other breakfast and coffee concepts.

The deal forges a path for JAB to be an acquirer and major distributor of drinks in the U.S, to compete with other beverage giants like PepsiCo and Coca-cola. But, the company is still vastly outsized by PepsiCo and Coca-Cola, which had sales in 2016 of $63 billion and $41 billion, respectively.

In a change of course from its previous acquisitions, JAB is keeping Dr Pepper partially a public company. With a public float, Keurig has easier access to cash for more acquisitions down the road.