v3.26.1
JDE Peet's Acquisition
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions
2. JDE Peet's Acquisition
OVERVIEW AND TOTAL CONSIDERATION EXCHANGED
JDE Peet's is a global coffee and tea company, serving more than 100 markets, with a portfolio of leading brands including Jacobs, L'OR, and Peet's, alongside a collection of local icons. On January 15, 2026, we commenced a tender offer to acquire all of the issued and outstanding ordinary shares of JDE Peet's for a cash offer price of €31.85 per share, without interest.
On March 27, 2026, the offer period for the issued and outstanding ordinary shares of JDE Peet's expired, and on April 1, 2026, we acquired substantially all, or 96.22%, of the issued and outstanding ordinary shares of JDE Peet's. The post-closing acceptance period expired on April 13, 2026, and we acquired additional shares on April 15, 2026. Altogether, the total shares acquired represent 97.75% of the issued and outstanding ordinary shares of JDE Peet's. We intend to acquire all remaining outstanding shares. The aggregate cash paid for the tendered shares was approximately €15.1 billion ($17.4 billion).
We intend to combine KDP's existing coffee business and the business of JDE Peet's and its subsidiaries to form one of the two independent, US-listed publicly traded companies resulting from the Separation.
Under the acquisition method of accounting, total consideration was as follows:
(in millions)
Amount
Net cash consideration paid
$17,430 
Liability to untendered shareholders(1)
402 
Consideration related to stock-based compensation awards(2)
104 
Settlement of preexisting relationships(3)
(6)
Total consideration
$17,930 
(1)Represents the estimated deferred consideration we expect to pay to acquire the remaining 2.25% of outstanding ordinary shares of JDE Peet's not yet acquired at the close of the post-closing acceptance period on April 13, 2026. The estimated deferred consideration has been recorded in Other current liabilities as the remaining shares are expected to be acquired through statutory buy-out proceedings, which grant us the legal right to compel the remaining shareholders to sell their existing shares. These buy-out proceedings have commenced as of June 30, 2026.
(2)All unvested JDE Peet's stock-based compensation awards under JDE Peet's employee incentive plans that were granted prior to the signing of the JDE Peet's Acquisition Agreement were accelerated and vested on or prior to the closing of the JDE Peet's Acquisition. The portion of fair value of these accelerated awards that relates to pre-combination service is included in consideration transferred; the remainder is accounted for as post-combination expense. Additionally, between September 2025 and March 2026, JDE Peet's granted a total of 879,750 stock-based compensation awards in the form of RSUs and PSUs. Pursuant to the JDE Peet's Acquisition Agreement, these awards were replaced by KDP RSUs with the same vesting period as the original awards in accordance with applicable “roll-over” provisions in the relevant JDE Peet's employee incentive plans. A portion of the fair value of these awards represents consideration transferred.
(3)Represents the carrying value of preexisting balances between KDP and JDE Peet's, which are deemed to approximate fair value.
During the first six months of 2026, we completed a series of transactions in order to obtain funding for the consideration of the JDE Peet's Acquisition:
•Delayed Draw Term Loan of $3.6 billion. Refer to Note 3 for additional information.
•Senior Unsecured Notes of approximately $6 billion. Refer to Note 3 for additional information.
•JV Investment of $4 billion. Refer to Note 4 for additional information.
•Issuance of Convertible Preferred Stock of $4.5 billion. Refer to Note 5 for additional information.
ALLOCATION OF CONSIDERATION EXCHANGED
Our preliminary allocation of consideration exchanged to the assets acquired, liabilities assumed, and non-controlling interests, in the JDE Peet's Acquisition is based on estimated fair values as of the acquisition date and is subject to change as additional information is obtained within the measurement period.
The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired, liabilities assumed, and non-controlling interests, in the JDE Peet's Acquisition as of April 1, 2026:
(in millions)Fair Value
Cash, cash equivalents, restricted cash, and restricted cash equivalents$913 
Trade accounts receivable885 
Inventories(1)
2,574 
Prepaid expenses and other current assets593 
Property, plant, and equipment(2)
3,122 
Intangible assets(3)
14,760 
Deferred tax assets181 
Other non-current assets911 
Accounts payable(3,875)
Accrued expenses(1,065)
Structured payables(1,008)
Short-term borrowings and current portion of long-term obligations(4)
(732)
Other current liabilities(435)
Long-term obligations, non-current portion(4)
(4,239)
Deferred tax liabilities(5)
(3,565)
Other non-current liabilities(540)
Net assets acquired8,480 
Goodwill9,660 
Less: non-controlling interests(6)
(210)
Total consideration$17,930 
(1)We preliminarily valued work-in-process and finished goods inventory using a comparative sales method approach, resulting in a step-up of $361 million, of which approximately $314 million was recognized in cost of sales in the second quarter of 2026 as the related inventory was sold during that period. Raw materials were carried at net book value.
(2)We preliminarily valued personal property using the cost approach, which is based upon current replacement cost of the asset as newly adjusted for any depreciation attributable to physical, functional and economic factors. We preliminarily assigned personal property a useful life ranging from 4 to 20 years. We preliminarily valued real property using the cost approach and land using the sales comparison approach. We preliminarily assigned real property a useful life between 6 and 52 years.
(3)See tabular disclosure of intangible assets other than goodwill below for discussion of preliminary valuation methodologies.
(4)For long-term obligations (both current and non-current portions) with observable market trading activity, we preliminarily valued the debt instruments using quoted prices on active markets. For long-term obligations without such markets, we preliminarily valued the debt instruments using a discounted cash flow methodology. Discount rates were generally determined using market yields for instruments with a BBB credit rating, adjusted for estimated company-specific risk.
(5)Net deferred tax liabilities represented the expected future tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. We used a preliminary consolidated tax rate to determine the net deferred tax liabilities and will record measurement period adjustments as we apply the appropriate tax rate for each jurisdiction within the acquired business.
(6)Non-controlling interests were measured using a combination of approaches, including the income approach and the market approach.
The JDE Peet's Acquisition preliminarily resulted in $9,660 million of goodwill. The preliminary goodwill recognized is attributable to expected synergies from combining our coffee operations with JDE Peet's' global coffee and tea platform, including revenue synergies driven by complementary brand portfolios having exposure to both in-home and away-from-home consumption channels, manufacturing and supply chain optimization, and operational and general and administrative cost synergies. The goodwill also reflects the value of JDE Peet's' assembled workforce, which does not qualify for separate recognition. Management is currently assessing the deductibility of the goodwill created in the JDE Peet's Acquisition for tax purposes.
The preliminary allocation of consideration exchanged to intangible assets other than goodwill acquired is as follows:
(in millions)Weighted Average Estimated Useful Life (in years)Fair Value
Brands with indefinite lives(1)
Indefinite$9,790 
Brands with definite lives(1)
153,050 
Customer relationships(2)
181,520 
Acquired technology(3)
9400 
Total intangible assets other than goodwill$14,760 
(1)We preliminarily valued these assets utilizing the multi-period excess earnings method, a form of the income approach.
(2)We preliminarily valued these assets using the distributor method, a form of the income approach.
(3)We preliminarily valued these assets utilizing a combination of the income approach and the cost approach.
The non-recurring fair value measurements associated with the purchase price allocation include significant unobservable inputs, such as discount rates, projected revenue growth rates, customer attrition rates, and useful life assumptions. Changes in these assumptions could result in changes to our fair value measurements.
TRANSACTION EXPENSES
In connection with the acquisition, the Company incurred acquisition-related costs of $126 million, consisting primarily of legal, advisory, financing, and other transaction costs. These costs were accounted for separately from the business combination and recognized as incurred, with $120 million recognized prior to the acquisition date and $6 million recognized subsequent to the acquisition date, within SG&A expenses.
PRO FORMA INFORMATION
Assuming JDE Peet's had been acquired as of December 31, 2024 and the results of JDE Peet's had been included in KDP’s results of operations beginning on January 1, 2025, the following table provides estimated unaudited pro forma results of operations for the second quarter and first six months of 2026 and 2025 under U.S. GAAP:
Second QuarterFirst Six Months
(unaudited, in millions)2026202520262025
Net sales$7,309 $7,247 $14,129 $13,266 
Net income508 470 735 633 
The pro forma amounts above include non-recurring adjustments for the amortization of the inventory step-up, as well as the impacts of transaction costs and post-combination stock-based compensation expenses, and the associated tax effects.
Estimated unaudited pro forma information is not necessarily indicative of the results that actually would have occurred had the JDE Peet's Acquisition been completed on the date indicated, or of future operating results.
For net sales and earnings of JDE Peet's since the acquisition date, refer to the JDE Peet's segment in Note 10.