Mondelez and D.E Master Blenders To Combine Coffee Businesses

May 28, 2014
Jacobs Douwe Egberts will have revenues of more than $7 billion.

Mondelez International Inc. and D.E Master Blenders 1753 B.V. on May 7 announced their intention to combine their respective coffee businesses to create the world's leading pure-play coffee company, with annual revenues of more than $7 billion.

The new company, to be called Jacobs Douwe Egberts, will be based in the Netherlands. It will combine some of the world's leading coffee brands -- such as Jacobs, Carte Noire, Gevalia, Kenco, Tassimo and Millicano from Mondelez and Douwe Egberts, L'Or, Pilao and Senseo from D.E Master Blenders. The business will hold leading market positions in more than two dozen countries and have a strong presence in emerging markets.

"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," said Pierre Laubies, CEO of D.E Master Blenders 1753 and prospective CEO of the combined company.

"We're delighted with this transaction and the substantial value we expect to create for our shareholders," said Irene Rosenfeld, chairman and CEO of Mondelez. "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."

In 2013, Mondelez's coffee business generated approximately $3.9 billion in revenue, and D.E Master Blenders sold $3.4 billion. In this transaction, Mondelez will receive $5 billion in cash and a 49 percent equity interest in Jacobs Douwe Egberts. Acorn Holdings BV (AHBV), owner of D.E Master Blenders, will hold the majority share and the majority of the seats on the board, which will be chaired by current D.E Master Blenders Chairman Bart Becht. AHBV itself is owned by an investor group led by JAB Holding Co.

The global transactions are not expected to be completed until some time in 2015.

This is kind of like the old Kraft partnering with the old Sara Lee.

Mondelez was (essentially) spun off from Kraft Foods in late 2012. Although overwhelmingly a snack company, it got only the international coffee brands; Maxwell House remains with Kraft. Just a few months earlier, Sara Lee spun off its European coffee businesses into D.E Master Blenders.

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