As one hedge fund favorite long crashes (Chipotle is down 9% in the pre-market), [11] so another hedge fund favorite short is about to spike (once it reopens for trading). JAB Group has decided that now is the time to offer a 78% premium to current prices to buy Keurig Green Mountain for $92 (note that is still down over 40% from its highs a year ago). The stock is currently halted at $51.51 leaving the 12% short interest biting their nails at the prospect of major losses and a good 'volkswagen-ing'.
- *KEURIG GREEN TO BE ACQUIRED BY INVESTOR GROUP FOR $92/SHR IN
- *KEURIG GREEN TRANSACTION ISN'T SUBJECT TO A FINANCING CONDITION
- *KEURIG GREEN MOUNTAIN TO REMAIN HEADQUARTERED IN WATERBURY, VT.
- *KEURIG GREEN OFFER REFLECTS PREMIUM ABOUT 77.9% ON DEC. 4 CLOSE
CMGR will re-open at 830ET
[12]
And the biggest loser, if only on an intraday basis, may be David Einhorn who famously reshorted GMCR in October (after having closed out his short initially placed in 2011 which he covered what was "ultimately an unsuccessful short") of this year, and as he wrote in his Q3 letter, "the second time has been a charm as our original thesis is playing out. So far, our third biggest winner this year."
That is alas no longer the case following today's 70% rip. The good news: with a basis of $102, Einhorn is still in the money. The bad news, for a hedge fund all that matters is daily P&L so add even more pain for Greenlight which through November was said to have been down over 20% YTD.
But it is not just Einhorn: as Markit notes, hedge funds are now nursing a $1 billion collective loss as a result of the massive short interest:
@zerohedge [13] Hedge funds sitting on a $1 Bn loss this morning after $GMCR [14] takeover. 8% of shares shorted pic.twitter.com/dkZh2OjzZK [15]
— Simon Colvin (@Simon_MSF) December 7, 2015 [16]
* * *
The full statement below:
Keurig Green Mountain, Inc. (“Keurig Green Mountain”) (NASDAQ:GMCR), a personal beverage system company that has revolutionized the way consumers create and enjoy beverages, and JAB Holding Company (“JAB”) today announced that the companies have entered into a definitive merger agreement under 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. The agreement, which has been unanimously approved by Keurig Green Mountain’s Board of Directors, represents a premium of approximately 77.9% over Keurig Green Mountain’s closing stock price on December 4, 2015.
JAB is acquiring Keurig Green Mountain in partnership with strategic minority investors who are already shareholders in Jacobs Douwe Egberts B.V., (“JDE”), including Mondel?z International and entities affiliated with BDT Capital Partners. At the close of the transaction, Keurig Green Mountain will be privately owned and will continue to be operated independently by the company’s management team and employees. Keurig Green Mountain will remain headquartered in Waterbury, VT.
Bart Becht, Chairman at JAB commented, “Keurig Green Mountain represents a major step forward in the creation of our global coffee platform. It is a fantastic company that uniquely brings together premium coffee brands and new beverage dispensing technologies like the famous Keurig single serve machine. Keurig Green Mountain will operate as an independent entity to ensure it will further build on its coffee & technology strength and continue to serve all its partners to the best of its abilities.”
Brian Kelley, President and CEO of Keurig Green Mountain commented, “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.”
“The Coca-Cola Company is fully supportive of this transaction,” said Muhtar Kent, Chairman and CEO, The Coca-Cola Company. “We have enjoyed a strong partnership with Keurig Green Mountain, and will continue our collaboration with JAB in order to capitalize on the growth opportunities in the single-serve, pod-based segment of the cold beverage industry. We look forward to working with JAB, an experienced operator with a successful track record of investing in and growing consumer companies.”
Irene Rosenfeld, Chairman and CEO of Mondel?z International, commented, “Keurig Green Mountain is a strategic asset that provides immediate access to the U.S., the largest coffee market in the world, and to on-demand, the fastest growing segment of the market. By leveraging our existing investment in JDE and not contributing incremental capital, we have the opportunity to diversify our participation in the global coffee category, while continuing to invest in our core snacking business to deliver significant value for our shareholders over the long term.”
* * *
And as one favorite hedge fund short surges, another hedge fund favorite long collapses...
[17]
It's going to be another tough month for the 'smart money'.
