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Keurig Green Mountain, Dr Pepper Snapple both facing challenges before planned merger, economist says

Wednesday, January 31, 2018

LAWRENCE — As K-Cup maker Keurig Green Mountain's $19 billion deal announced Monday to acquire Dr Pepper Snapple seemed to surprise watchers of the beverage industry, a University of Kansas scholar of mergers said both companies were facing challenges.

George Bittlingmayer, professor emeritus in the KU School of Business, is available to discuss issues surrounding Keurig's planned acquisition. Bittlingmayer's research interests include mergers and acquisitions, investment by business, and how politics and regulation affect financial markets. He is the former Wagnon Distinguished Professor of Finance in the B-School and previously served as an economist at the Federal Trade Commission.

"Both halves of this deal  — Keurig and Dr Pepper Snapple — are facing headwinds. Coffee is a tough business, and the public's taste for coffee in a pod comes and goes. Sugary and carbonated water are falling out of favor," Bittlingmayer said. "Overall, consumers are looking for alternative forms of liquid refreshment. Because Keurig is privately held, it seems plausible its owners see the public company that will result from this deal as a way of exiting."

He said the deal was almost certainly conceived before this week's stock market troubles, with the expectation that a continued strong market would allow even businesses that are more or less treading water to still produce decent investment returns.

To arrange an interview with Bittlingmayer, contact George Diepenbrock at 785-864-8853 or gdiepenbrock@ku.edu.

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