JAB Holding Co. has lined up about $6 billion of debt financing from three Wall Street banks to help fund its takeover of Keurig Green Mountain Inc., according to a person with knowledge of the matter.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley pledged to finance the deal, said the person and another person with knowledge of the matter. They’re aiming to syndicate commitments to institutional loan investors and to other banks in the leveraged-loan market, said the people, who asked not to be identified because the financing hasn’t been disclosed. A representative for JAB Holding declined to comment, as did spokeswomen for Goldman Sachs, JPMorgan and Morgan Stanley.
Keurig Green Mountain said Dec. 7 it would be acquired by a JAB Holding-led investor group for about $13.9 billion in cash. The maker of single-serve coffee brewers will be privately owned and independently operated following the buyout, which is set to close in the first quarter, it said in a statement.
The deal isn’t subject to a financing condition, Keurig said in the statement.
The purchase price of $92 a share is 78 percent higher than Keurig’s close on Dec. 4, the last trading day before the offer was announced. Shares of the maker of single-serve coffee brewers traded at more than $140 a year ago, but the company suffered from waning sales of its K-Cup containers and lower prices on brewers. A new cold brewer is rolling out more slowly than expected, and the strong dollar is hampering international sales.
Even with the record-setting premium, the acquisition’s valuation is only about 12 times the trailing year’s earnings before interest, taxes, depreciation and amortization. Before the deal, the only significant long-term debt was $330 million drawn on a $1.47 billion revolving loan that matures in 2012, according to data compiled by Bloomberg.
JAB is a closely held investment firm based in Luxembourg that manages the $16 billion fortune of Austria’s Reimann family. It’s planning a challenge to global leader Nestle SA in the coffee industry. JAB owns a controlling stake of Jacobs Douwe Egberts, Peet’s Coffee & Tea, Caribou Coffee, Einstein Noah Restaurant Group, Espresso House and Baresso Coffee. Its holdings outside of food include Jimmy Choo shoes and Coty fragrances.
Minority investors in the JAB group include Mondelez International Inc. and affiliates of BDT Capital Partners.