(Photo by Herb Swanson/Getty)
The Coca-Cola Co. is jumping on the at-home beverage-making trend by agreeing to pay $1.25 billion for a stake in Green Mountain Coffee Roasters and the opportunity to develop a countertop system for producing cold drinks that would likely compete with current market leader SodaStream.
Under the terms of the transaction, which was announced late Wednesday, Coca-Cola and Green Mountain will collaborate for at least the next decade on the creation of a cold beverage maker that combines Coca-Cola brands with Green Mountain’s popular Keurig “K-Cup” system. Coca-Cola sealed its commitment to the venture by acquiring 16.7 million newly issued Green Mountain shares—a stock purchase that gives the soft drink giant a 10 percent minority stake in the Waterbury, Vt.–based coffee maker.
Reprising its frequent role as legal adviser to Atlanta-based Coca-Cola, Skadden, Arps, Slate, Meagher & Flom is acting as lead outside counsel to the company in negotiating the partnership deal with a New York–based deal team led by M&A partners Martha McGarry and Thomas Greenberg. Intellectual property and technology partner Bruce Goldner and M&A partner Peter Serating are also working on the matter. (A Skadden spokeswoman said none of the lawyers were available to comment Thursday.)
Skadden has previously advised Coca-Cola in connection with the company’s acquisition of ownership stakes in its franchised bottling plants, including the 2010 purchase of its North American bottler for $12.2 billion; its 2007 purchase of Vitaminwater maker Glaceau for $4.1 billion; and its acquisitions of Fuze Beverage and Honest Tea for undisclosed sums. Skadden also advised Coca-Cola in 2008 on its planned acquisition of China Huiyuan Juice for nearly $2.4 billion, a deal that Chinese regulators ultimately blocked.
Green Mountain, meanwhile, has turned to a Baker & McKenzie team led by Chicago M&A partners Craig Roeder and Aaron Rice. Washington, D.C., partner Katherine Funk and associate John Fedele are advising on antitrust considerations.
Baker & McKenzie’s hire represents something of a departure for Green Mountain, which often employs Ropes & Gray as lead counsel on M&A deals. The Am Law Daily named Ropes partner Jane Goldstein a Dealmaker of the Week in September 2010 for her work advising the company on its acquisition of Canadian coffee beanery Van Houtte for $890 million. At the time, Goldstein cited several other deals she had handled for the company, including its 2006 purchase of Keurig Inc.; its acquisition of the Tully’s Coffee Corp. brand, wholesale and supply chain businesses in 2009; and its contentious $290 million takeover of California’s Diedrich Coffee that same year.
A Ropes spokesman said in a statement that the firm continues to count Green Mountain as a client “and is advising the company now on other matters.” A Baker & McKenzie spokesman said the firm would not comment on the client relationship.
The value of Green Mountain stock soared following the deal’s announcement, rising more than 26 percent by close of trading Thursday to $102.10. Coca-Cola purchased its shares of Green Mountain for $74.98 apiece, the volume-weighted average price of the stock over the past 50 days. The New York Times’ Dealbook blog notes that Green Mountain plans to buy back some of its shares to prevent the newly issued securities from diluting the stock’s value. (Competitor SodaStream’s stock also rose Thursday despite a drop just following Coca-Cola’s announcement. It ended the day up 7 percent at $38.35.)
Green Mountain CEO and president Brian Kelley said in a statement that the new products will “[empower] consumers with an innovative, convenient way to freshly prepare their favorite cold beverages at the push of a button.” Similar to its line of hot drinks, the company said, the Keurig Cold system will use single-serve pods to dispense chilled thirst quenchers including carbonated drinks, flavored waters, juice and sports drinks, and teas.