Keurig Dr Pepper has announced updated financing plans and transaction timelines for its acquisition of JDE Peet’s and its separation into two independent companies.

The company revealed its plans to acquire coffee giant JDE Peet’s in August last year, with the deal set to see the separation of the merged entity’s coffee operations from its other beverage businesses.

Two independent companies will be created as a result (Beverage Co and Global Coffee Co, pending announcement of official corporate names).

Part of the updated financing plan is an agreement to upsize the previously announced Beverage Co convertible preferred equity investment, co-led by Apollo and KKR, to $4.5 billion from $3 billion.

This updated figure includes additional participation from ‘long-term oriented’ investors, KDP said. As a result of this, the company said it is no longer considering a partial IPO of Beverage Co.

KDP now plans to finance the upcoming acquisition through a combination of approximately $9 billion of long-term debt, $8.5 billion of equity capital and the assumption of approximately $5 billion of existing JDE Peet’s bonds.

Closure of the JDE Peet’s acquisition is targeted for early 2026, with separation timing dependent on the achievement of key milestones, including appropriate leverage levels at each company and supportive market conditions.

Though exact timing of the tax-free spin of Global Coffee Co is yet to be confirmed, KDP said that ‘key transformation workstreams’ continue to target operational readiness to separate by the end of next year.

Anthony DiSilvestro, Keurig Dr Pepper’s chief financial officer, said: “Today's update demonstrates our commitment to ensuring strong and resilient capital structures at each stage of this transaction by introducing an additional $1.5 billion of cost-efficient equity capital into the financing and bringing on board a high-quality mix of shareholders who recognise the value creation opportunity ahead”.

He added: “Our comprehensive financing solution, combined with strong cash generation, will drive rapid deleveraging, reinforce KDP's balance sheet and help to establish Beverage Co and Global Coffee Co as successful, investment-grade companies.”