News Column

Coke buys stake in coffee maker

February 5, 2014

By Dan D'Ambrosio, USA TODAY

Green Mountain Coffee Roasters on Wednesday announced a $1.25 billion deal with Coca-Cola that overshadowed the Waterbury, Vt ., company's earnings report boasting $1.4 billion in sales for the first quarter. The news that the soft drink giant will take a 10% stake in the coffee company drove up Green Mountain Coffee shares as much as 60% in after-hours trading. The stock closed up nearly 1% on Wednesday to $80.88 . Coke shares rose 13 cents to $37.61 . Coca-Cola, the world's largest beverage company, also signed an exclusive 10-year agreement to market its global portfolio of brands through a Keurig brewing system for cold drinks being developed by Green Mountain. Keurig Cold is expected to launch in 2015. Brian Kelley , president and CEO of Green Mountain Coffee, said in a call with analysts Wednesday that the new Keurig Cold brewer would do for cold beverages what the company has done for hot beverages -- deliver consumers' favorite drinks at the push of a button. "Having Coke as a partner will amplify and accelerate this consumer movement," said Kelley, who was president of Coca-Cola Refreshments before joining the coffee company in 2012. Under the terms of the deal, Coke will purchase approximately 16.7 million shares of Green Mountain Coffee at $74.98 per share. The investment is expected to close in March. "We continue to believe our unique combination of technology and beverage expertise gives us a significant competitive advantage," Kelley said. "We're excited about today's announcement of a cold beverage partnership with Coca-Cola." Muhtar Kent , chairman and chief executive of Coca-Cola, said in a statement the agreement with Green Mountain Coffee demonstrates the Atlanta -based company's creative approach to partnerships, and ability to stay ahead of consumer trends driving the beverage industry. "By pairing the Coca-Cola Company's brand leadership and global footprint with GMCR'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," Kent said. Dan D'Ambrosio also reports for The Burlington (Vt.) Free Press


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Source: USA Today


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