Whose Earnings and Profits? What Dividend? A Discussion Based on the Dr Pepper-Keurig Transaction

In July 2018, Dr Pepper Snapple Group, Inc. (“DPSG”) acquired all the stock of the Maple Parent Holdings Corp. (better known as “Keurig”) in exchange for DPSG common stock. The acquisition was unusual in two respects: DPSG paid its shareholders a pre-merger “special dividend” equal to approximately 87% of the stock’s value; DPSG then issued to Keurig’s shareholders DPSG stock equal to approximately 87% of the combined companies’ stock. ...

Jeffrey T. Sheffield