NEW YORK (TheStreet) --Keurig Green Mountain's (GMCR) board of directors has recommended that shareholders vote in favor of being taken private by a group of investors led by JAB Holding, CNBC.com reports.
Earlier this month the at home beverage brewing systems company announced that it entered into a merger agreement, in which a JAB-led investor group will acquire Keurig Green Mountain for $92.00 per share in cash, or a total equity value of approximately $13.9 billion.
Keurig's board has unanimously approved the deal, which will result in Keurig Green Mountain being privately owned and continuing to be operated independently by the company's management team and employees.
"This transaction will deliver significant cash value for our shareholders and offers an exciting new chapter for our customers, partners and employees by combining Keurig Green Mountain with JAB's global coffee platform. JAB fully supports Keurig Green Mountain's culture and values as we continue to pursue our commitment to deliver innovative beverage solutions for consumers at the touch of a button," Keurig CEO Brain Kelley said in a statement announcing the deal on December 7.
Shares of Keurig Green Mountain closed up by 0.28% to $89.73 on Wednesday afternoon.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate KEURIG GREEN MOUNTAIN INC as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GMCR's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
- 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 Food Products industry and the overall market, KEURIG GREEN MOUNTAIN INC's return on equity exceeds that of both the industry average and the S&P 500.
- 41.94% is the gross profit margin for KEURIG GREEN MOUNTAIN INC which we consider to be strong. Regardless of GMCR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.12% trails the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.97%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 29.06% compared to the year-earlier quarter. 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 could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Food Products industry average. The net income has significantly decreased by 32.9% when compared to the same quarter one year ago, falling from $141.06 million to $94.60 million.
- You can view the full analysis from the report here: GMCR