By Lisa Baertlein and Phil Wahba
Feb 5 Green Mountain Coffee Roasters Inc, maker
of the popular Keurig single-cup coffee brewer, said on
Wednesday that the Coca-Cola Co bought a 10 percent stake
in it for $1.25 billion and would help launch Green Mountain's
new cold drink machine planned for next year.
Shares in Green Mountain soared 39.7 percent to
$113.01 in extended trading, while those of its likely new
rival, SodaStream International Ltd, tumbled almost 10
percent to $32.01.
Under their 10-year agreement, Green Mountain and Coca-Cola
will collaborate on the development and introduction of
Coca-Cola products on Green Mountain's upcoming in-home cold
beverage machine that will serve both carbonated and
non-carbonated beverages, including soft drinks, tea and juice.
The deal will make Green Mountain the exclusive partner for
the production and sale of Coca-Cola's branded single-serve,
pod-based cold beverages, the companies said.
Green Mountain's Keurig machine popularized the use of pods
- containing everything from coffee, tea or hot chocolate powder
- for easy, in-home, one-cup brewing of hot drinks.
Its upcoming cold drink machine also will use pods and will
carry products from multiple brands, Green Mountain's President
and Chief Executive Brian Kelley said on a conference call with
"This gives Green Mountain a beverage partner with some
hugely powerful global brands. For Coke, it gives them access to
some really cool, new cutting-edge pod cold-beverage
technology," said John Sicher, editor and publisher of Beverage
"It gives them (Coke) access to a new channel," said
Sicher. He said soda sales in the United States have been in
decline since 2005, while growth in pod-based coffee brewing has
Under the terms of the agreement, Coca-Cola will acquire
roughly 16.7 million newly issued shares of Green Mountain. The
new shares have been priced at $74.98, which represents the
trailing 50-trading-day volume weighted average price as of
The significant after-hours move in Green Mountain's stock
appeared to be a classic short squeeze as traders who bet
against the stock scrambled to cover their positions.
David Einhorn, who runs hedge fund Greenlight Capital Inc.,
was among investors with short positions in Green Mountain as of
Oct. 15. Greenlight's spokesman declined to comment to Reuters
The most recent data from Nasdaq, which dates to Jan. 15,
had short interest in Green Mountain at about 25 percent of
shares outstanding - about 37.6 million shares. That's lower
than peak short interest in November 2012, when more than 51
million shares were being shorted.
The average consumer staples company has just 1.6 percent of
shares held short, according to Thomson Reuters Starmine.
Green Mountain separately reported better-than-expected
quarterly profit on Wednesday.
The Waterbury, Vermont-based company reported net income of
$138.2 million, or 91 cents per share, for the fiscal first
quarter ended Dec. 28, up from $107.6 million, or 70 cents per
share, a year earlier.
On an adjusted basis, the company earned 96 cents per share
- 6 cents better than analysts on average had expected,
according to Thomson Reuters I/B/E/S.
Net sales rose almost percent to $1.39 billion.
Green Mountain also plans to launch a new hot drink brewing
system this fall. Called Keurig 2.0, it will use both
single-serve K-Cups and larger-sized K-Carafe packs that brew 28
ounces of coffee.