NEW YORK (TheStreet) -Time and again, the companies that are true winners are the ones that have taken their fate into their own hands versus sitting back.
Think about VF Corp (VFC), which has been able to acquire and grow its acquisitions of North Face (2000), Nautica (2003), Vans (2004), Kipling (2004), Reef (2005), Seven For All Mankind (2007), lucy activewear (2007), Splendid (2009), and Timberland (2011). Or Hain Celestial (HAIN) who has grown via Tilda, Ella's Kitchen, Blue Print Cleanse, Greek Gods and more. Think about PVH Corp PVH acquiring Calvin, then Tommy and Warnaco. Or the many acquisitions of Pinnacle Foods (PF), B&G Foods (BGS) and Jarden (JAH).
But today we got a merger where the two individual companies needed one another. Green Mountain (GMCR) and Coca-Cola (KO - Get Report). Coke announced a ten-year strategic partnership with Green Mountain for $1.25bn. Under the agreement, the two companies will collaborate to produce and sell pod-based cold beverages through the Keurig Cold system, which is expected to launch in 2015. This puts some pressure, of course, on SodaStream (SODA - Get Report).
First, you ask, why does Green Mountain need Coke? Green Mountain needed Coke's brand equity, distribution and marketing prowess, particularly given increased competition in the single-serve market and as growth for the high multiple company was slated to slow as Herb Greenberg points out.
And does the $165bn market cap soft drink mega company really need Green Mountain? Turns out the answer is yes. Declining soda sales in the US have created investor worries. The consumer soft drink (CSD) category is challenged, given regulatory pressure on sugary sodas and shifting attitudes about health. And Coke is essentially 100% beverages versus Pepsi (PEP - Get Report) which gets 60% of its profit from Snacks. And while emerging markets have been the hope for Coke shares, growth has decelerated. The partnership wtih Green Mountain creates an opportunity for the company to reshape consumer perceptions.
Must Read: Are we seeing a bottoming in retail?
A win-win and two companies creating value via combination.
--Written by Nicole Urken in New York.
>Contact by Email
11/14/14 - 08:54 AM EST
11/14/14 - 08:35 AM EST
10/31/14 - 10:02 AM EDT
06/09/14 - 09:36 AM EDT
05/29/14 - 11:15 AM EDT
11/27/15 - 21:00 PM EST
11/27/15 - 21:00 PM EST
11/27/15 - 11:10 AM EST
11/27/15 - 11:07 AM EST
11/27/15 - 10:35 AM EST
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
Trifecta Stocks analyzes over 4,000 equities weekly to find the elite 1% of stocks that pass rigorous quantitative, fundamental and technical tests.
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
Chris Versace, using sophisticated stock screening and fundamental research, identifies potentially explosive small and mid-cap stocks.
Master swing trader Alan Farley uses his sophisticated software screens to review thousands of stocks each day for you, to find just the handful that meet his demanding criteria.