One of the state’s largest employers is about to undergo a major change in ownership. Keurig Green Mountain, the Waterbury-based coffee company that employs more than 600 people statewide, is to be bought by an investor group for $13.9 billion. But state officials say they’re confident that Vermont workers will keep their jobs.
Patricia Moulton, secretary of the Agency of Commerce and Community Development, says Keurig Green Mountain is among the more important employers in Vermont. She says Gov. Peter Shumlin reached out to company leadership immediately after the deal was announced Monday.
“The governor has spoken directly with Brian Kelley, who assures us there will be no layoffs here in Vermont, no planned reduction in force, and the company will remain headquartered in Waterbury, and that’s very good news,” Moulton says.
Brian Kelley is the CEO of Keurig, which was formerly known as Green Mountain Coffee Roasters. The company’s stock price has cratered by more than 60 percent over the past year. Kelley said in a statement on Monday that the sale of Keurig quote “offers an exciting new chapter for our customers, partners and employees.”
A company spokesperson declined to offer a taped interview Monday.
Ken Shea, a senior industry analyst for Bloomberg Intelligence, says the investor group that will purchase the coffee company likely has expansion on the mind. He says he doesn’t think Vermont workers shouldn’t have any immediate reason for concern.
“I would see this as an investment to grow, not so much to cut costs,” Shea says.
The investor group taking over Keurig is led by the Luxembourg-based JAB Holding Company. The investor group paid well over market value for Keurig. Shea says JAB has other holdings in the coffee industry. And he says the group likely wants to use Keurig’s single-cup coffee line as a foray into the U.S. coffee-products industry.
“They’re looking to grow this opportunity globally. And I think Keurig could be their beachhead investment in the U.S,” Shea says.
Keurig, meanwhile, according to Shea, can leverage its relationship with JAB to launch new strategic business initiatives.
It’s been a tumultuous year for Keurig, which has facilities in Waterbury, Williston and Essex. Sales of the most recent version of its coffee machine failed to meet expectations, and Shea says consumer appetite for the cold-brewing systems recently introduced hasn't been as healthy as Keurig anticipated.
“And I think Keurig looks at this as an opportunity to join a larger firm that has already made significant commitments to the coffee market,” Shea says.
"It's like any business, where if they do well they'll hire, if they do poorly, they're going to have to lay more people off. They laid off 200 here just in August because sales weren't meeting expectations." - Tim McQuiston, editor of Vermont Business Magazine
Tim McQuiston, editor of Vermont Business Magazine, says Keurig is the kind of narrowly focused, mid-sized public company that was ripe for a takeover.
He says the fate of Keurig jobs in Vermont hinges more on the success of the company’s products than it does with details of its ownership.
“It’s like any business, where if they do well they’ll hire, if they do poorly, they’re going to have to lay more people off,” McQuiston says. “They laid off 200 here just in August because sales weren’t meeting expectations.”
Company officials say the transaction won’t be finalized until early next year. Coca-Cola owns 17 percent of Keurig shares, and endorsed the transaction, as did member of Keurig’s board.
JAB is paying $92 per share for Keurig Green Mountain, according to a news release announcing the deal. That’s a 77-permium on Keurig shares that finished trading Friday at $51.70.
Updated 4:30 p.m. to include comments from analyst, Ken Shea, and Vermont Business Magazine editor, Tim McQuiston.
