Keurig Dr Pepper tumbles after announcing $18 billion acquisition and planned split-up of coffee business from other drinks

Keurig Dr Pepper is admitting that soft drinks and coffee don’t mix.

The beverage company announced a plan to buy Dutch-based JDE Peet’s NV for 15.7 billion euros (or roughly $18.4 billion) in an all-stock deal and then cleave itself in two, separating the newly combined company’s coffee and other refreshment drinks into stand-alone entities.

This reverses the move from about seven years ago, when the closing of the merger between Dr Pepper Snapple Group and Keurig Green Mountain created the diversified beverage giant in the first place.

Shares of Keurig Dr Pepper are down nearly 7% as of 8:25 a.m. ET, the worst performer among S&P 500 constituents.

“Upon separation, Global Coffee Co., with approximately $16 billion in combined annual net sales, will be the world’s largest pure-play coffee company,” the company said in a press release.

Management anticipates $400 million in cost savings stemming from this acquisition, and expects the deal will be additive to its bottom line in the first year of the union.

This purchase “to essentially help it divest its struggling Keurig coffee business (23% of sales) is a positive move to add focus to its strong cold beverages business,” Bloomberg Intelligence senior industry analyst Kenneth Shea wrote.