By Catherine Larkin and Katerina Petroff

(Bloomberg) -- Keurig Dr Pepper Inc. agreed to buy JDE Peet’s NV for €15.7 billion ($18.4 billion) to bolster its struggling coffee business before kicking off a split of its operations.

The company will pay €31.85 a share in cash for the Dutch firm, a 20% premium over its closing price on Aug. 22, according to a statement Monday. Keurig Dr Pepper then plans to separate its coffee and beverage units into two independent, US-listed companies once the deal is completed.

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“We are seizing an exceptional opportunity to create a global coffee giant,” Chief Executive Officer Tim Cofer said.

Keurig Dr Pepper saw roughly flat US coffee sales in the second quarter as it warned the business will remain subdued for the balance of 2025, in part due to inflation and tariffs. Higher prices for K-Cups were offset by lower shipments of both single-serve pods and brewers.

Investment firm JAB Holding Co., which manages funds for the billionaire Reimann family, orchestrated the Keurig takeover of soda maker Dr Pepper in 2018. But the coffee business has sputtered amid tougher competition in the US and higher green coffee prices, while the other beverages have been doing well.

JAB is also behind JDE Peet’s, building the firm from a series of acquisitions to challenge global coffee leader Nestle SA. JAB and certain JDE Peet’s executives committed to tendering their shares in the transaction, representing 69% of the Dutch firm’s voting stock. JAB also holds about 4.4% of Keurig Dr Pepper outstanding shares, data compiled by Bloomberg show.

“This transaction delivers more than $12.5 billion in cash proceeds, creating a rock-solid balance sheet that ideally positions JAB to pursue strategic opportunities across our consumer and insurance segments,” JAB said in e—mailed comments.

JDE Peet’s — with more than 50 coffee and tea brands around the world, including L’OR, Peet’s and Jacobs — surpassed organic revenue estimates for the first half of the year and raised its full-year outlook. New CEO Rafael Oliveira has overhauled the coffee producer’s strategy after the rise in bean prices squeezed margins.