Coca-Cola Raises Stake in Keurig Green Mountain (GMCR) to 16%; Is a Full Blown Buyout Next?

In an amended 13D filing on Keurig Green Mountain (NASDAQ: GMCR), Coca-Cola (NYSE: KO) disclosed a 16%, or 26,037,771 share, stake in the company. This is up 56.06% from the 16,684,139 shares held at February 27, 2014.

The original stake relates to a February 2014 agreement whereby the two signed a 10-year deal to collaborate on the development and introduction of The Coca-Cola Company’s global brand portfolio for use in GMCR’s forthcoming Keurig Cold. As part of the agreement, The Coca-Cola Company agreed to acquire 16,684,139 newly issued shares in GMCR for approximately $1.25 billion, which represents an approximate 10% ownership in GMCR. Under a standstill agreement, Coca-Cola had the right to increase its stake to up to 16%. The agreement also gives Coca-Cola the right to participate in any future sale transaction.

From the original 13D:

Notwithstanding the foregoing, the Reporting Persons will be entitled to purchase, from time to time, in one or more transactions, in the open market or in privately negotiated transactions or from the Issuer, additional shares of Common Stock (the “Additional Shares”), as long as, when taken together with all other shares of Common Stock then beneficially owned by the Reporting Persons, such purchase will not result in the Reporting Persons beneficially owning more than 16.0% of the aggregate number of shares of Common Stock then outstanding. In addition, if the Issuer determines to explore a possible process for a sale transaction that would, if consummated, constitute a Change of Control (as defined in the Purchase Agreement), or otherwise would, if consummated, result in a direct or indirect sale, spin-off or other divestiture of a material portion of the Issuer's assets, the Issuer has agreed to notify the Reporting Persons of such process and allow the Reporting Persons to participate therein.

While today's disclosure will likely get the speculative juices going on a future buyout of Keurig by Coke, the beverage giant will likely wait until results are seen from Keurig Cold before taking such a bold step. Keurig Cold is currently under development with expected availability in Keurig Green Mountain's fiscal year 2015. So any deal would likely be a year away at a minimum.

For more notable holders of Keurig Green Mountain stock click here.

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