Keurig Dr Pepper's Strategic Reversal Sparks Debt Concerns and Market Uncertainty, Earning Hold RatingWe like the many strategic options KDP had been creating for its soda unit, but not the ~6x net debt/EBITDA this deal causes ◆ Downgrade to Hold pending clarity on debt paydown and business separation; cut DCF TP to USD30 (from USD42) KDP announced the effective undoing of its 2018 merger of for excellent reasons. The original deal does not recognize how different the growth and development needs would be for Dr Pepper versus a single serve at-home coffee business. Not surprisingly, the 5-year CAGR total shareholder return from KDP share has been 3.6% (vs NASDAQ Composite Index: +13%). While KDP’s previous management focused on growing demand for its popular Dr Pepper brand, it was late in keeping pace with big beverage trends.