Mondelez International Inc. and DE Master Blenders 1753 are merging their coffee businesses to form a coffee giant to rival the market leader Nestle SA. The new Netherlands-based joint venture will be called Jacobs Douwe Egberts and will be run by the current management at DE Master Blenders. The deal will combine Mondelez’ brands such as Carte Noire, and Gevalia with DE Blenders’ L’OR, Pilao, and Senseo brands. With revenues of $7 billion Jacobs Douwe Egberts will be the world’s number one pure play coffee business, although still much smaller than Nestle’s coffee business. The deal will allow Mondelez, which will receive $5 billion and a 49% stake in the new business to focus on its snack business. Mondelez will use the $5 billion to expand its $2 billion share buyback program and pay down debt. The company also separately announced a $3.5 billion restructuring program with the goal of cutting costs, boosting margins, and addressing concerns raised by new activist investor board member Nelson Peltz.
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