Investing.com -- Shares in Keurig Dr Pepper Inc (NASDAQ:KDP) fell more than 3.7% in premarket trading Tuesday after the beverage company announced that its top shareholder JAB Holding will sell 60 million shares via a secondary public offering priced at $32.85 per share.
JAB has also given the underwriter a 30-day option to buy an additional 9 million shares.
Europe-based JAB currently holds a stake of 20.9% in KDP, according to LSEG data.
Upon the offering’s completion, JAB’s ownership in KDP will drop to roughly 16.5% of the company’s outstanding shares, or about 15.8% if the underwriter exercises its option in full. The remaining shares JAB holds will be under a 90-day lock-up period with the underwriter.
"Keurig Dr Pepper has long been JAB's largest and most successful investment and will remain so following this transaction," said Joachim Creus, managing partner, vice chairman and CEO of JAB.
"JAB's demonstrated conviction in the resilience of the global coffee sector reinforces our positive view on KDP, and we look forward to participating in the value-creation ahead.”
The coffeemaker’s shares fell about 8% since its earnings report last week.
Analysts at Wells Fargo said the stock is “getting too cheap, again.”
“KDP's stock has been weak since results last week, as a surprising miss in Coffee was too much noise relative to positioning, which had built in the name because it was supposed to lack said noise,” they noted.
“We think this weakness in shares has been harsh, more reflecting said positioning in the stock (which became concentrated) vs any fundamental concerns that would be commensurate with the move.”
Alongside the stake cut, Keurig Dr Pepper also announced that Frank Engelen, Managing Partner and CFO of JAB, has been appointed to KDP’s Board of Directors, filling the seat vacated by Lubomira Rochet, who resigned.
Engelen will serve until KDP’s annual shareholder meeting in 2025.
“As KDP Board members, Frank and I will continue to support the Company's vision of providing a beverage for every need, anytime, anywhere,” Creus said.
The news comes days after Keurig Dr Pepper announced it would acquire Ghost, a brand popular for its flavors inspired by sweets like Sour Patch Kids and Oreo, for more than $1 billion.
The move aims to boost Keurig’s reach among younger consumers, the company said in a statement on Thursday.
According to Keurig, Ghost has experienced rapid growth, with net sales quadrupling over the past three years.
This acquisition marks Keurig's largest since it purchased Dr Pepper Snapple Group in 2018 for close to $19 billion, as reported by the Wall Street Journal.