Mondelez and DE Master challenge rival Nestle in coffee merger
Wednesday 07 May 2014
The US owner of Cadbury and the Dutch group behind coffee brand Douwe Egberts have teamed up to create a $7bn coffee group in a bid to rival Swiss coffee giant Nestle.
Cadbury owner Mondelēz International, which owns brands including Jacobs, Kenco and Tassimo, is currently number two in the coffee market globally while DE Master Blenders was third.
DE Master Blenders has merged with Mondelēz’s coffee business and the new group, to be called Jacobs Douwe Egberts, will have sales of more than $7bn and to rival the current number one player Nestle, which owns Nespresso and Nescafe.
Coffee prices have been rising in the past year due to weather issues in Brazil, one of the main coffee bean growers, and analysts expect the deal to heighten competition in the sector.
The terms of the deal see Mondelēz take a 49 per cent stake in the new group and it will receive a payment of $5 billion in cash for its brands which will now be managed by the DE Master team.
DE Master Blenders’ is led by former Reckitt Benckiser chief executive Bart Becht and made a splash in the coffee sector last year when it bought Douwe Egberts for about €7.5 billion.
The coffee deal will leave Mondelēz free to concentrate on its snacks business which includes Oreo cookies and Cadbury chocolate and 85 per cent of net sales will come from snacks after the deal completes - a move which will please activist investor Nelson Peltz.
Peltz’s Trian Fund Management built a stake in Mondelēz and has been agitating for change. He demanded better growth, cost-cutting and improved returns for shareholders.
Mondelēz, which split from Kraft in 2012, gave Mr Peltz a seat on its board in January. It revealed a cost cutting plan along with its first quarter results and said it plans cost savings of at least $1.5bn by 2018.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 The secret report that helps Israelis to hide facts
- 3 Danish TV reporter is all business up top, all party down below
- 4 Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
- 5 Businessman charged £75 for three small bottles of water in London hotel
Danish TV reporter is all business up top, all party down below
Israel-Gaza conflict: President Obama presses Netanyahu to call ‘immediate and unconditional’ Gaza ceasefire
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
Zayn Malik on Israel-Gaza: One Direction singer bombarded with Twitter death threats after posting #FreePalestine
MH17 crash: Black boxes show plane suffered 'massive explosive decompression' following shrapnel hit
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...