Mondelez, D.E Master combining coffee businesses

by Josh Sosland
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DEERFIELD, ILL. – Mondelēz International, Inc. and D.E Master Blenders 1753 B.V. have announced plans to combine their coffee businesses into a new company to be named Jacobs Douwe Egberts (J.D.E.) that will be based in The Netherlands.

According to the companies, J.D.E. will have annual sales of more than $7 billion with an EBITDA margin in the high teens. Together, the combined business of Mondelēz and D.E Master businesses hold a leading market position in more than two dozen countries and has a strong position in emerging markets. The brand portfolio of J.D.E. will include Jacobs, Carte Noire, Gevalia, Kenco, Tassimo and Millicanao from Mondelēz and Douwe Egberts, L’OR, Pilao and Senseo from D.E Master Blenders.

In 2013, the Mondelēz coffee business generated sales of $3.9 billion and D.E Masters had $3.4 billion in sales. Mondelēz was the second largest coffee company globally and D.E Master ranked third. Nestle is the world’s largest coffee company.

Pierre Laubies, chief executive officer of D.E Master Blenders 1753 will lead the combined business.

“Jacobs Douwe Egberts will leverage the rich histories of both companies, combining our complementary geographic footprints, portfolios of iconic brands and innovative technologies to offer more people around the world more access to high-quality coffee and allowing the company to capitalize on the significant growth opportunities in a highly attractive market,” he said.

Under terms of the transaction, the coffee portfolio of Mondelēz outside of France will be combined with the D.E Master 1753 business. Acorn Holdings B.V., the private equity owner of D.E Master, will acquire the Mondelēz business in France. Mondelēz currently has joint venture partners who have been invited to participate in the new company.

The transactions are subject to regulatory approvals and the completion of employee information and consultation requirements, the companies said.

Under terms of the transaction, Mondelēz will receive payment of $5 billion for its coffee business and will hold a 49% equity interest in the new company.

“We’re delighted with this transaction and the substantial value we expect to create for our shareholders,” said Irene Rosenfeld, chairman and c.e.o. of Mondelēz International. “By retaining a significant stake in the combined company, we’ll continue to benefit from the future growth of the coffee category and share in the synergies and tremendous upside of this leading, one-of-a-kind coffee company.”

Acorn will hold a majority share in the proposed combined company and will have a majority of the seats on the board. Bart Becht, who currently is chairman of the D.E Master board, will be chairman of J.E.E.

Acorn is owned by an investor group led by JAB Holding Company s.a.r.l. The group, led by Joh. A. Benckiser GmbH in 2013 paid $10 billion to acquire the D.E Master Blenders business that, in 2012, had been spun off by Sara Lee Corp. JAB also had acquired U.S.-based Peet’s Coffee for about $1 billion and Caribou Coffee for $340 million.
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