Coffee machine maker Keurig to be sold for almost $14B

Keurig, the maker of single-cup coffee machine maker, said Monday that it has agreed to be sold to private equity firm JAB Holding Co. for about $14 billion.

Keurig will join rival brands Peet’s Coffee & Tea, Stumptown Coffee Roasters and Caribou Coffee, all of which are part of a portfolio of brands owned by JAB.

Shares of Keurig Green Mountain Inc (NASDAQ:GMCR) were down 4.7% during trading on Friday, Analyst Ratings Network.com reports. It bought Mondelez International’s Europe-focused coffee business in July for around $4 billion, combining it with DE Master Blenders, which it had bought for about $10 billion, to create the world’s largest pure-play coffee company.

Coca-Cola Co, Keurig’s biggest single shareholder, said it was supportive of the deal. 3,784,538 shares of the stock were exchanged.

Keurig Green Mountain (GMCR) finally found a way to stop halt its tumbling share price-it’s going private, and that’s great news for Coca-Cola (KO).

“It’s a demanding valuation”, said Vontobel analyst Jean-Philippe Bertschy, who estimates the deal price represents a multiple of about 15 times EBITDA. It sells Keurig Single Cup Brewers and Arabica bean coffees, including Fair Trade Certified, certified organic, flavored, limited edition and blends offered in K-Cup and Vue packs (single serve packs) for use with its Keurig Single Cup Brewers. (GMCR) is a specialty coffee and coffee maker. Its stock had lost more than 60 percent of its market value this year up to Friday’s close.

“Our holiday survey of Bed, Bath & Beyond (BBBY), Target (TGT) and Wal-Mart (WMT) stores revealed higher expectations for sales of brewers, particularly Keurig models, for the holiday selling season driven by addition of lower-priced offerings”, Wedbush said in an analysts note, Barron’s reported. A new cold brewer also has been poorly received, and the strong dollar is hampering worldwide sales.

Minority investors in the JAB group include Mondelez International Inc. and affiliates of BDT Capital Partners. Its holdings outside of food include Jimmy Choo shoes and Coty fragrances. Keurig Green Mountain’s revenue was down 13.3% compared to the same quarter previous year. SunTrust lowered their price target on Keurig Green Mountain from $60.00 to $50.00 and set a “neutral” rating for the company in a report on Wednesday, November 11th.