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Issue Date: Vol. 54, No. 3, March 2014, Posted On: 2/5/2014

Coca-Cola Buys $1.25 Billion Stake In Green Mountain In Pact For Upcoming 'Keurig Cold' Platform

Emily Jed
TAGS: Coca-Cola Co. Keurig agreement, Green Mountain Coffee Roasters, Keurig Cold at-home beverage system, Coca-Cola buys stake in Keurig, Coca-Cola single-serve pods, beverage news, Keurig cold drink platform

ATLANTA -- Coca-Cola Co. has signed a 10-year agreement to develop its iconic soft drink brands for single-cup use in Green Mountain Coffee Roasters' Keurig Cold at-home beverage system, set to launch in 2015. The companies also entered into a common stock purchase agreement through which Coca-Cola Co. will purchase a 10% minority equity stake in Green Mountain, valued at $1.25 billion.

Green Mountain's Keurig Cold single-serve beverage system will use precisely formulated single-serve pods to dispense freshly made cold beverages including carbonated drinks, enhanced waters and juice and sports drinks. The cold system is expected to be an open-architecture platform similar to the Keurig hot system.

Under the agreement, Green Mountain will be Coca-Cola's exclusive partner for the global production and sale of the soda giant's branded single-serve, pod-based cold beverages. The two companies said they will also explore future opportunities to collaborate on the Keurig platform.

Coca-Cola will acquire 16,684,139 newly issued shares in Green Mountain, priced at $74.98, for approximately $1.25 billion.

"This global relationship combines The Coca-Cola Co.'s unparalleled brand, distribution and marketing strengths with Green Mountain Coffee Roasters' innovative technology and beverage system expertise," said Brian P. Kelley, president and chief executive of Green Mountain Coffee Roasters.

Coca-Cola chairman and chief executive Muhtar Kent said pairing Coke's brand leadership and global footprint with Green Mountain Coffee Roasters' innovative technology will enable the companies to capitalize on the growth opportunities in the single-serve, pod-based segment of the cold beverage industry.

"Importantly, this partnership provides our consumers with a convenient way to enjoy the brands they love through in-home preparation," Kent said.

Coca-Cola's investment in Green Mountain is expected to close in March.

Green Mountain said it intends to execute a share repurchase program to reduce dilution from the transaction under its existing $1.1 billion share repurchase authorization. In addition, the roaster intends to use a portion of the proceeds from Coca-Cola's investment to fund anticipated capital expenditures for its Keurig Cold beverage system over the next several years.

SEE ALSO: Green Mountain Coffee Roasters reports first quarter fiscal year 2014 results including a record 5.1 million Keurig brewers sold in the period

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