Green Mountain Partners With Coca-Cola to Slurp Away at SodaStream

Investing

Published: February 5, 2014 4:48 pm

Last Updated: February 6, 2014 5:56 am

The big news regarding Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) was supposed to be its earnings report. Instead, news is out that Coca-Cola Co. (NYSE: KO) has signed a 10-year agreement with green Mountain to development and introduce a Coca-Cola brand portfolio for use in GMCR’s forthcoming Keurig Cold at-home beverage system. Earnings are out as well, but SodaStream International Ltd. (NASDAQ: SODA) is getting pounded on this news.

Green Mountain and Coca-Cola will cooperate to bring the Keurig Cold beverage system to consumers around the world. Does that mean that this is not just limited to the United States? Apparently so.

Here is where the numbers get real interesting. Coca-Cola will purchase a 10% minority equity position in Green Mountain — some 16,684,139 newly issued shares for approximately $1.25 billion. The newly issued shares have been priced at $74.98, based upon a 50-day average price.

Another part of the deal is that Green Mountain will become Coca-Cola’s exclusive partner for the production and sale of Coca-Cola branded single-serve, pod-based cold beverages. The two companies also will explore other future opportunities to collaborate on the Keurig platform.

The coffee company did announce earnings as well. Adjusted earnings were $0.96 per share and revenue was $1.39 billion. Thomson Reuters had estimates of $0.90 per share on $1.41 billion in revenue. Earnings for 2014 are being put at $3.75 to $3.85 per share versus $3.82 per share expected. Sales for 2014 are expected to be up in the high single digits for 2014.

Green Mountain shares were halted ahead of this and the earnings news, but the stock closed up 0.9% at $80.88 against a 52-week range of $42.25 to $89.66.

SodaStream International Ltd. (NASDAQ: SODA) was mentioned earlier. The stock fell over 1% to $35.79 on the day, and now the added competition has shares down another 7% or so to $33.15 in the after-hours reaction. Anything under $35.27 will mark a 52-week low. Having a company like Green Mountain as competition is one thing. For SodaStream to compete against a Coca-Cola and Green Mountain partnership is a much more formidable competing interest.

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