Specialty coffee retailer Keurig Green Mountain Inc. (GMCR) has entered into an agreement to completely acquire MDS Global Holdings plc (Bevyz) for $220 million cash to boost its single-portion pack portfolio. Keurig currently owns 15% of the company.
Bevyz, founded in 2004, has developed a single-portion multidrink system that dispenses both hot and cold beverages.
The acquisition of Bevyz gives Keurig, whose market is almost entirely in the U.S., a technology boost to the Keurig brewer. On closure of the deal, the 50 Bevyz employees will become part of Keurig but continue to be based primarily in the Netherlands and Malta.
The new takeover comes in the wake of Keurig’s decision to step into the world of cold beverages and soda with the launch of The Keurig Cold Machine in the fall of 2015. The new machine will make sodas, sports drinks and other beverages at the touch of a button. Like its coffee machines, the cold machine would use pods to make a variety of drinks.
In this context, the coffee major inked a 10-year partnership deal with the beverage giant The Coca Cola Co. (KO), whereby Keurig Green Mountain will exclusively make Coca-Cola branded pods for use on its Keurig Cold at-home beverage system. Coca-Cola will also work with Keurig Green Mountain on the development and launch of this latest version of Keurig single-cup brewer. Keurig announced that it plans to launch the cold brewing machine by 2015 fall.
Keurig Green Mountain aims to popularize the single-cup brewing system in America and, in this regard, has signed several strategic distribution agreements to rope in popular brands like Dunkin’ Brands Group Inc. (DNKN) and Starbucks Corp. (SBUX) into its portion pack systems.
Along with the press release, Keurig carrying the Zacks Rank #2 (Buy) reiterated the fiscal 2015 outlook provided in the fourth-quarter and fiscal 2014 earnings conference call.
Guidance for Fiscal 2015
In fiscal 2015, the company expects adjusted earnings per share to grow in the range of mid-to-high single digits. The company aims to achieve high single to low double-digit growth in annual revenues for the year.
Guidance for First-Quarter Fiscal 2015
In the first quarter of fiscal 2015, Keurig Green Mountain expects adjusted earnings per share in a range of 83 to 88 cents. Sales are expected to grow in the high single-digits. Effective tax rate is expected to be within 35–35.5%.
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