Sep. 23 at 2:15 AM
$KDP
Yes and no, consider the massive amount of debt that this acquisition will require.... The leverage for the coffeeco will be 6x post spin off, thats bordeline BBB- IG rating or BB+ high yield rating... KDP standalone leverage is around 3x now.. so yea
$24 is a low estimate BUT devils advocate you can argue with lower EPS and p/e ratios...
Consiser this,
$JHX paid nearly
$9 billion for AZEK.... Here we are a few quarters later and the value creation of that acquisition is NEGATIVE... Meaning if you buy shares of JHX today you would be getting the AZEK busines for "free" (just look at what James Hardie is worth today vs what JH and a
AZEK were worth before the acquisition.... Crystal clear example of how NOT to do this)
I am bullish KDP but there is an argument mgmt paid too much for
$JDEPY and they might fumble the execution of the acquisition and spinoff.. add a recession and yeah this could go south given the high leverage... Hope not!
