Keurig Dr Pepper has announced a series of transactions with Chobani that will help it reduce debt and prepare for a company split early next year.
As part of the agreement, Keurig Dr Pepper will sell its full equity stake in Chobani back to the yogurt maker for US$800 million.
Keurig Dr Pepper inherited the equity in 2023 through an asset roll-over. It first bought a 33 per cent stake in La Colombe, just a few months before Chobani acquired the coffee brand.
In addition, Chobani will acquire Keurig Dr Pepper’s manufacturing facility and warehouse in Allentown, Pennsylvania for approximately $125 million. To ensure a seamless transition, Chobani will continue to manufacture certain products for Keurig Dr Pepper at the facility for a defined period under a co-manufacturing agreement.
Keurig Dr Pepper plans to use the net proceeds from the sales to reduce debt as it prepares for the separation into two future businesses, Beverage Co and Global Coffee Co, next year.
“Together, [the transactions] enhance our financial flexibility, strengthen the efficiency of our manufacturing network and support the expansion of our important distribution partnership with Chobani,” said Tim Cofer, CEO at Keurig Dr Pepper.
“This change also positions the Allentown facility for continued growth under an owner whose strategic priorities are well matched to the site, while ensuring continuity for our brands, customers and employees.”
The deals are expected to close in the third quarter, subject to the satisfaction of customary closing conditions.
In a separate announcement, Chobani said it will invest approximately $1.2 billion over the next five years in the Allentown facility.
According to the company, the site provides a great starting point to build on with new equipment, technology and production capabilities.
Chobani plans to use the facility to scale up production lines.
