Keurig Dr Pepper slides on $2 bln equity raise for debt reduction

Goldman Sachs group

Today 12:19

** Keurig Dr Pepper's KDP.O shares down 0.6% at $35.20 premarket on Fri after $2 bln follow-on priced to reduce debt
** Co late Thurs sold ~57.97 mln shares at $34.50; it could raise $2.3 bln if full over-allotment option (greenshoe) is exercised
** KDP stock dropped 7.4% to close at $35.42 on Thurs after co launched the offering to repay or repurchase $2 bln of debt ahead of planned separation into two publicly traded companies; the split of Beverage Co. and Global Coffee Co. is expected to occur early next year
** Goldman Sachs and Morgan Stanley joint bookrunners for offering
** As of Sept 30, KDP had long-term debt of ~$21.6 bln, per recent 10-Q filing
** Last week, KDP flagged slower Q4 US coffee profit growth on cautious spending and increased competition from private players
** At Thurs close, stock up ~26% YTD, outperforming ~11% gain in S&P 500 .SPX and 18.5% advance in S&P 500 Consumer Staples .SPLRCS
** 13 of 20 analysts rate the stock "strong buy" or "buy", 7 "hold"; median PT $40, per LSEG

(Lance Tupper is a Reuters market analyst. The views expressed are his own)
((lance.tupper@tr.com))