4 percent of total revenue for gmcr keurig ownership

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for 20.4 percent of total revenue for GMCR. Keurig’s ownership structure changed in 2002 as a result of agree-ments with GMCR and Van Houtte. Keurig sold stock to Van Houtte, raising $10 million to seed Keurig’s at-home business launch. The investment secured Van Houtte a 28 percent ownership position in Keurig. Simultaneously, GMCR invested $15 million, by acquiring and executing stock options, to purchase 42 percent of Keurig. As a result of these strategic moves, GMCR and Van Houtte joined Memorial Drive Trust (MDT) as the top-three sharehold-ers of Keurig. MDT, an investment advisory firm, had been the primary venture investor in Keurig since 1995 and led Keurig’s board of directors. Separate shareholder agreements with MDT, however, restricted both GMCR and Van Houtte from holding a seat on Keurig’s board of directors. In a 2002 article, Nick Lazaris was quoted as saying: “Keurig has not had, nor does it expect to have, any single shareholder owning a majority of Keurig’s stock. GMCR will be joining Van Houtte and Memorial Drive Trust, as one of Keurig’s largest shareholders. Led by Memorial Drive Trust, a U.S. based profit-sharing plan Company-wide Keurig brewer and K-Cup portion pack shipments (Unaudited data in thousands)52 wks. Ended52 wks. Ended53 wks. EndedPercent GrowthPercent GrowthSept. 27, 2008Sept. 29, 2007Sept. 30, 200620082007At Home Brewers (Consumer)88342221910993Away from Home Brewers (Commercial)100572875104Total Keurig brewers shipped98347924710594Total K-Cups shipped (system-wide)1,012,356637,823448,8805942Total K-Cups sold by GMC578,939359,056255,4126141Source: Keurig Inc. 1,6001,4001,2001,0008006004002000FY’05FY’06FY’07FY’08FY’09 EST.Millions3124496381,550–1,6501,01259%FY’0853%–63%FY’09 EST.55%Q1’09Exhibit 5 Keurig K-Cup Shipments, All Roasters
C218 Case 29:: Keurig Coffeethat has served as the lead venture investor in Keurig since 1995, Keurig’s Board of Directors remains fully in control of Keurig’s business strategy, and no roaster or other com-mercial business partner will have a seat on Keurig’s Board of Directors.” 14Nick Lazaris defended Keurig’s indepen-dence from roasters in a letter to Keurig’s distributors and other roasters: Our core strategy remains unchanged: we are com-mitted to a multi-roaster strategy that relies on strong relationships with selected gourmet coffee roasters who take a great deal of pride in the coffee consumption experience that supports the meaning of their brand to consumers. 15As of 2005, Keurig remained effectively controlled by MD Co. (controlled by MDT), which owned approximately 23 percent of Keurig’s capital stock. As a result of contrac-tual limitations and restrictions agreed to by GMCR and certain other stockholders of Keurig, MD Co. retained the ability to elect a majority of Keurig’s board of directors, make certain types of amendments to Keurig’s certificate of incorporation, and approve or reject a sale of Keurig’s business. In June 2006, GMCR completed its acquisition of Keurig for $104.3 million.

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Term
Spring
Professor
Kamil Shahbazkar
Tags
KEURIG, Coffee preparation

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