Following KDP's announced plan to acquire coffee company JDE Peet's (JDEP EUR31 NR) and then split into two separate companies, we trim our target by $2 to $32 on a 2026 P/E of 14.9x. This is a justified discount to KDP's five-year average forward P/E of 19.7x and larger soft drink peers. We think the announcement is likely to serve as an overhang for KDP shares, as the deal is much better for the acquiree, in our view. We believe this is a deal intended to serve the interests of private equity conglomerate JAB Holdings, which possesses a 69% voting interest in JDEP. KDP shares are trading 8% lower, while JDE Peet's shares rose 7% in European trading, with shares being exchanged at only a 2% discount to the offer price. In our view, estimated cost synergies of $400M for the new coffee company (to be realized over three years) are disappointing in light of the deal size, but JAB's pitch is likely to be that investors are better served over time with the coffee and soft drinks brands as separate entities.

http://www.mtnewswires.com
Copyright © 2025 MT Newswires. All rights reserved. MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.