Keurig Dr Pepper plans to spend $18 billion to buy the Dutch company JDE Peet’s. The firm will then split in two, separating its soft drink business from its coffee business entirely. 

This is just the latest chapter in a now decades-long corporate trend of spinning off disparate business segments into independent companies. 

Dr Pepper got into the coffee business back in 2018, when it merged with Keurig’s parent company.

“It was a bit of a grand experiment,” said Duane Stanford of Beverage Digest.

Stanford said the firm wanted to quench customers’ thirst every moment of the day.

“Morning, afternoon, nighttime, by having refreshment beverages and having your coffee,” said Stanford.

The merger seemed to pay off during the COVID lockdowns. Workers stuck at home turned to Keurig machines for their caffeine fix and bought an endless stream of K-cups. Or seemingly endless.

“Once COVID ended, people started migrating back to coffee shops, back to the office,” Stanford said.

Since then, the company’s growth has slowed.

“Keurig is a business that is struggling to grow,” said Laura Born at the University of Chicago.

Born said the coffee side of Keurig Dr Pepper has been a drag on the company’s stock as a whole.

“So, by taking out the lower growth business, the left behind business of Dr Pepper should trade better than it does today,” said Born.

In fact, some recent breakups, including GE and Johnson & Johnson, have boosted the resulting firms’ total valuations.

“It’s a lesson we’ve been learning since the ‘60s is to de-conglomerate, that focus is king,” said Jarrad Harford at the University of Washington.

Harford said focus makes it easier for investors to figure out how much a firm is actually worth.

“They want a stock that reflects just the one core underlying business,” said Harford.

Firms do have to be careful when de-conglomerating.

“There is risk of duplication of services in the back office,” said Eric Lewandowski of Wixom Equity Partners. “There’ll be two separate HR departments, finance departments.”

But the benefits of being more focused and nimble outweigh the risks, particularly in uncertain times.

“I think we'll see more of these types of plays, especially given some of the question marks around tariffs in Washington,” said Lewandowski.

Right now, investors, like coffee snobs, prefer their firms pure and single source.