Keurig Dr Pepper Inc. (KDP) stock is trading down by 4.4% at last check during Thursday's premarket session after the beverage maker commenced an underwritten public offering of $2 billion of shares of its common stock.
The company intends to grant underwriters a 30-day option to purchase up to an additional $300 million of common stock.
Keurig Dr Pepper plans to use the net proceeds to repay or repurchase approximately $2 billion in outstanding debt. The debt may include borrowings under its delayed draw term loan, commercial paper notes and senior unsecured notes.
As of Sept. 30, Keurig Dr Pepper held cash and cash equivalents of $1.29 billion and total debt of $28.9 billion. During the third quarter, the company's free cash flow totaled $1.01 billion.
Separation Targeted For Early 2027
The transaction is intended to strengthen the company's balance sheet ahead of its planned separation into two independent, publicly traded companies, Beverage Co. and Global Coffee Co., in early 2027.
The company aims to provide both businesses with additional financial capacity to invest and execute on their respective strategic priorities, while strengthening their investment-grade ratings.
In October, the company named Russ Torres as CEO of the future Global Coffee Co. He joined KDP on Nov. 3 and currently serves as CEO of its coffee operating unit prior to separation.
Recent Results
KDP, on Nov. 3, reported its third-quarter results and reaffirmed its full-year 2026 sales and adjusted earnings outlook.
Revenue surged 70.6% to $7.34 billion, topping Wall Street's $7.33 billion estimate, while adjusted earnings rose 22.2% to 66 cents per share, beating the analyst estimate of 62 cents.
The company's U.S. Refreshment Beverages revenue increased 10.9% to $3 billion, led by Dr Pepper, Canada Dry and energy drink brand Ghost.
However, CEO Tim Cofer said inflation and price-sensitive consumers weighed on its U.S. Coffee business, particularly in the single-serve coffee segment.
KDP Price Action: Keurig Dr Pepper shares were down 4.31% at $36.60 during premarket trading on Thursday, according to market data.
