Green Mountain Stock Soars 42 Percent After Coca-Cola Buys In

Image: Green Mountain Stock Soars 42 Percent After Coca-Cola Buys In

Thursday, 06 Feb 2014 12:31 PM

By Clyde Hughes

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The stock for Green Mountain Coffee Roasters, Inc. leaped 42 percent Wednesday after Coca-Cola purchased a 10 percent stake in the company.

Reuters reported that Coca-Cola's $1.25 billion investment in Green Mountain will go toward launching the coffee company's new cold drinking machine, scheduled for release possibly in October. Green Mountain shares rose to $114.85 each. 

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Green Mountain made its name with its Keurig coffee machines that popularized the small packets of coffee called pods to create convenient one-cup hot drinks. Green Mountain has sold 30 million single-cup machines, which are used in homes and offices around the world.

"We are really excited to start with Coca-Cola," Green Mountain's president and chief executive Brian Kelley told Reuters.

Coca-Cola Chief Executive Officer Muhtar Kent said that the deal opens up new business possibilities for the world's largest soda company.

"This gives Green Mountain a beverage partner with some hugely powerful global brands," John Sicher, editor and publisher of Beverage Digest, told Reuters. "For Coke, it gives them access to some really cool, new cutting-edge pod cold-beverage technology."

The New York Times reported that Wednesday's deal announcement, caused SodaStream's stock, one of Green Mountain's rivals, to plummet more than eight percent in after-hours trading. 

Coke's chief rival, PepsiCo Inc., denied rumors that it was planning to buy SodaStream. Citron Research published a note, according to CNN Money, saying that PepsiCo may now have to respond to Coke's move by forming a partnership with SodaStream or buying it altogether. 

"What is Pepsi going to do? Unless they believe that Coke is dead wrong, they have no choice: Hello, SodaStream!" Citron wrote.

Green Mountain, based in Waterbury, Vt., told Reuters that its income leaped 28 percent to $138.2 million, or 91 cents per share, for the fiscal first quarter, which concluded Dec. 28. The company said that its net sales rose almost percent to $1.39 billion.

Green Mountain is also moving ahead with plans to introduce a new hot drink brewing system this fall.

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