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Issue Date: Vol. 54, No. 3, March 2014, Posted On: 3/3/2014

Coke Closes On $1.25 Billion Green Mountain Stake, Setting Stage For Keurig DIY Cold Platform

Emily Jed
TAGS: vending, coffee service, Coca-Cola Co., Green Mountain Coffee Roasters Inc., Keurig brewers, single-cup soda, Keurig Cold at-home beverage system, SodaStream, DIY carbonation

ATLANTA -- Coca-Cola Co. and Green Mountain Coffee Roasters Inc., maker of Keurig brewers, have closed on the previously announced common stock purchase that gives the soda giant a 10% minority equity stake in the Waterbury, VT, roaster, valued at $1.25 billion.

Coca-Cola in early February signed a 10-year agreement to develop its iconic soft drink brands for single-cup use in the Keurig Cold at-home beverage system, set to launch in 2015. | SEE STORY

In connection with the closing, Coke will acquire 16,684,139 of newly issued shares of GMCR common stock at a purchase price of $74.98 each. Green Mountain plans to use the proceeds for a share buyback and to fund product development expenses for the Keurig Cold beverage system.

Green Mountain chief executive Brian Kelley has said that consumers can expect its new soda machine to be similar to Keurig coffee machines, with K-cup pods that hold Coke-flavored syrups. The soda pods will contain two chambers, he said. The first will have liquid syrup for flavoring; the second will contain a preform of carbonation that will be released when the drink-making process starts. In addition to pods for Coke brands, the Keurig will offer pods for noncarbonated cold teas, juice and sports drinks.

Keurig Cold is seen as a move that puts a target on the back of SodaStream, the reigning king of DIY carbonation. SodaStream saw 37% year-over-year revenue growth in 2013, adding $528 million to its coffers. In recent weeks, however, its stock has gone on a roller coaster ride as investors mull the Coke-Keurig opportunity.

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