Keurig Dr Pepper announced Tuesday it will sell its full equity stake in Chobani back to the yogurt maker for $800 million, along with a manufacturing facility and warehouse in Allentown, Pennsylvania, for approximately $125 million, bringing the total to $925 million in pre-tax proceeds.
The company said it will use the net proceeds to reduce debt as it prepares to separate its operations into two publicly traded businesses: Beverage Co. and Global Coffee Co.
Chobani will also acquire the Allentown facility’s lease, equipment and operations as part of the $125 million transaction. The company said it plans to offer employment to the site’s manufacturing and warehouse employees, while workers in delivery, customer service and other corporate functions will remain with Keurig Dr Pepper. Under a co-manufacturing agreement, Chobani will continue producing certain products for Keurig Dr Pepper at the Allentown facility for a defined period following the sale’s close.
The two companies are also expanding their distribution relationship. Under the expanded distribution relationship, Keurig Dr Pepper’s direct store delivery network will carry La Colombe ready-to-drink lattes and other beverage products owned by Chobani, with the arrangement extending to future product launches in that category. The two companies will also keep in place their current agreement covering the licensing, production, and distribution of La Colombe-branded K-Cup pods across the U.S. and Canada.
“These transactions reflect the success of our partnership with Chobani and are designed to create value for both organizations,” Keurig Dr Pepper CEO Tim Cofer said in a statement. “Together, they enhance our financial flexibility, strengthen the efficiency of our manufacturing network and support the expansion of our important distribution partnership with Chobani.”
Chobani Founder and CEO Hamdi Ulukaya said in a statement that the Allentown plant would be used to its full potential under the deal. “And most importantly, it means more jobs and more opportunity for Pennsylvania farmers,” he said.
According to the Wall Street Journal, Chobani intends to pour roughly $1.2 billion into the Allentown campus over five years, adding more than 900 jobs.
The stake dates to 2023, when Keurig Dr Pepper traded its La Colombe holdings — a ready-to-drink coffee brand — to obtain its position in Chobani, according to the Wall Street Journal. The beverage company has since agreed to acquire JDE Peet’s for $18 billion and is working toward spinning off its Peet’s and Keurig businesses into a standalone coffee company.
The transactions are expected to close by the end of September, subject to customary closing conditions, the company said.