NEW YORK (TheStreet) -- Coca-Cola (KO) - Get Report has built up a roughly 17% stake in Keurig Green Mountain (GMCR), which announced today that it will be bought for $13.9 billion by an investor group led by Germany's JAB Holding.
Coca-Cola acquired approximately 25.9 million shares of Keurig for roughly $91 per share from February 2014 through February 2015, the Wall Street Journal reports.
Keurig stock is skyrocketing by 72.30% to $89.08 this afternoon, up from $51.70 at Friday's market close and near its $92-per-share buyout price.
Today's surge in Keurig stock means that Coca-Cola will make about $25 million from its privatization, the Journal notes.
Additionally, should the Keurig acquirers turn its KOLD cold-beverage brewer into a success, Coca-Cola will have the "opportunity to expand into the 'at-home' channel through its 10-year strategic partnership with Keurig," Wells Fargo analyst Bonnie Herzogsaid, Barron's reports.
Coca-Cola has a 10-year deal to include its products in Keurig's KOLD brewing machine.
"The CEO of Coke took a big stake in this company when everyone thought it was a goner, and took a big stake in Monster (MNST) when people thought it was in trouble," TheStreet's Jim Cramer said on CNBC's Squawk on the Street this morning. "Maybe he's a silent winner in going with this."
Coca-Cola CEO Muhtar Kent has said the company is "fully supportive" of Keurig's buyout.
Shares of the beverage company are falling 0.16% to $43.22 in afternoon trading on Monday.
Separately, TheStreet Ratings team rates COCA-COLA CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate COCA-COLA CO (KO) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Beverages industry and the overall market, COCA-COLA CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for COCA-COLA CO is rather high; currently it is at 64.16%. Regardless of KO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KO's net profit margin of 12.68% compares favorably to the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 4.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- COCA-COLA CO's earnings per share declined by 31.3% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, COCA-COLA CO reported lower earnings of $1.59 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($1.99 versus $1.59).
- After a year of stock price fluctuations, the net result is that KO's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
- You can view the full analysis from the report here: KO
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.