FDBusiness.com

Mondelez International and DE Master Blenders 1753 plan to combine their respective coffee businesses to create the world’s leading pure-play coffee company, with annual revenues of more than $7 billion (€5 billion) and an EBITDA margin in the high teens.

The new company, to be called Jacobs Douwe Egberts (JDE), will be based in the Netherlands. It will hold leading market positions in more than two dozen countries and have a strong emerging market presence, giving it significant revenue synergy opportunities in the $81 billion global coffee category. The two companies own some of the world’s leading coffee brands, such as Jacobs, Carte Noire, Gevalia, Kenco, Tassimo and Millicano from Mondelez International and Douwe Egberts, L’OR, Pilao and Senseo from D.E Master Blenders 1753.

“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,” says Pierre Laubies, chief executive of D.E Master Blenders 1753 and prospective chief executive of the combined company.

“We’re delighted with this transaction and the substantial value we expect to create for our shareholders,” says Irene Rosenfeld, chairman and chief executive of Mondelez International, whose coffee portfolio has outpaced market growth since 2010, thanks to innovations such as the Tassimo multibeverage on-demand brewing system and Millicano wholebean instant coffee. “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 International’s wholly owned coffee business generated approximately $3.9 billion (€2.9 billion) in revenue, and D.E Master Blenders 1753 generated approximately $3.4 billion (€2.5 billion) in revenue.

Upon completion of all proposed transactions, Mondelez International will receive cash of approximately $5 billion and a 49 percent equity interest in Jacobs Douwe Egberts.  AHBV will hold a majority share in the proposed combined company and will have a majority of the seats on the Board, which will be chaired by current D.E Master Blenders 1753 Chairman Bart Becht.  AHBV is owned by an investor group led by JAB Holding Company s.a r.l.  Mondelez International will have certain minority rights.

The transactions are expected to be completed in the course of 2015, subject to limited closing conditions, including regulatory approvals