- Coffee-brewing company agreed to $92-a-share deal this week
- JAB Holding is acquiring the company for $13.9 billion in cash
Keurig Green Mountain Inc. shareholder Ricky Sandler said he’ll support a $92-a-share takeover bid for the maker of coffee brewers, even though he thinks the stock could have have reached $150 by 2017.
Sandler, who runs hedge fund Eminence Capital LLC, said the growth prospects of Keurig’s single-serve coffee machines are strong enough to propel the shares much higher. But he’s ready to accept the current offer because it’s safer. Eminence owns more than 4 percent of Keurig’s shares, plus options that bring the total stake to 7.2 percent, Sandler said.
“If execution went as we thought it could over the next two years, we could see this being a stock that traded at $150,” he said in an interview. “But there’s risk in that.”
Keurig agreed earlier this week to be acquired by a group led by JAB Holding Co., the owner of Peet’s, Caribou and other coffee brands, for $13.9 billion in cash. Though the price represented a 78 percent premium over where the shares were trading, it followed a yearlong slump for the stock. That led some analysts to conclude that the price was on the cheap side.
Keurig has suffered from slowing sales of its K-Cup containers and declining prices on brewers. A new cold-beverage machine also is rolling out more slowly than expected, limiting its short-term impact on growth.
But the headwinds of the past year don’t change Keurig’s inherent value, Sandler said. There is still a big global opportunity for its hot brewer, and the cold device -- called the Keurig Kold -- will eventually bolster growth, he said.
“This company owns the single-serve coffee system in this country, and that is a powerful, powerful platform,” he said.