Green Mountain Coffee Roasters Inc. (GMCR) Beats, Coca-Cola Buys Stake


Green Mountain Coffee Roasters Inc. (NYSE:GMCR) announced its fourth quarter earnings after closing bell tonight, but those results were overshadowed by the company’s other announcement. Officials halted trading on Green Mountain shares after hours so that it could reveal that The Coca-Cola Company (NYSE:KO) has bought a 10% minority stake in it.

Coca-Cola buys Green Mountain shares

The deal between the two companies is a 10-year agreement. They will collaborate on developing and introducing The Coca-Cola Company (NYSE:KO)’s products for use in Green Mountain Coffee Roasters Inc. (NYSE:GMCR)’s new Keurig Cold beverage system. Coca-Cola’s purchase of Green Mountain shares was part of their effort “to align long-term interest.”

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The Coca-Cola Company (NYSE:KO) will buy nearly 16.7 million newly issued shares in Green Mountain Coffee Roasters Inc. (NYSE:GMCR) for about $1.25 billion. The new shares were priced at $74.98, which is the trailing 50-trading-day volume weighted average price. Green Mountain will be Coca-Cola’s exclusive partner in producing and selling Coca-Cola branded pods for the cold beverages. In addition, the two companies said they would be exploring “other future opportunities to collaborate on the Keurig platform.” The new cold beverage system is expected to be available in 2015.

In order to reduce dilution from the newly issued shares, Green Mountain Coffee Roasters Inc. (NYSE:GMCR) said it would “executive a meaningful share repurchase program.” It will be done under the company’s current $1.1 billion share repurchase authorization.

In other news… Green Mountain reports earnings

Green Mountain Coffee Roasters Inc. (NYSE:GMCR) also released its quarterly report, posting non-GAAP earnings of 96 cents per share on $1.39 billion in revenue.  Analysts had been expecting the company to report earnings of 90 cents per share on revenue of $1.4 billion for the quarter.

The company reported net sales of $1.4 billion, a 4% year over year increase and GAAP diluted earnings per share of 91 cents, a 30% increase. It saw 4% sales growth and reported its “best holiday season ever,” reporting record brewer volume and retail sell-through.