German investor Joh A Benckiser, co-led by former Reckitt Benckiser boss Bart Becht, is to buy the owner of Douwe Egberts coffee in the industry’s biggest ever deal.
DE Master Blenders 1753, which owns Pickwick tea as well as Douwe Egberts, said on Friday that it had reached conditional agreement on a €12.50 a share cash offer from a group of investors led by JAB.
The deal, which values Master Blenders at about €7.5bn, will help bolster JAB’s position in the hot drinks industry and help create a global coffee brand on a par with Nestle.
JAB, which is the investment vehicle of the billionaire Reimann family, has already built up a portfolio of coffee brands including Caribou Coffee and Peet’s Tea & Coffee in the United States. Master Blenders will give it a strong position in Europe.
The offer is below JAB’s original bid proposal of €12.75 a share, but above Master Blenders’ closing share price of €12.23 on Thursday. Master Blenders’ board said it supports this offer.
“DE Master Blenders has a very strong management team, fantastic brands and enormous expertise and potential in the coffee and tea categories,” Bart Becht, chairman of Joh A Benckiser said.
“JAB and its partners intend to use DEMB as their platform for both organic growth as well as acquisitions in the fast moving consumer goods coffee and tea categories.”
Commenting on the offer, Norman Sorenson, chairman of Master Blenders, said: “The fact that JAB will use DEMB as a platform for further growth and has guaranteed to keep its headquarters, R&D and major production sites in the Netherlands, gives the board confidence that this offer is in the best interest of employees, shareholders and all other stakeholders.”
The offer is fully financed and JAB said it will use a combination of about €3bn in debt and about €4.9bn of equity.
Master Blenders and JAB announced on March 28 that they were in discussions over a deal, triggering a 25pc increase in Master Blenders’ share price that day.
But on that same day, Reckitt Benckiser’s shares slipped on concerns that JAB could sell down part of its 10.7pc stake in the household goods giant in order to fund its coffee deal.
However, JAB had indicated only recently that it had no plans to reduce its stake in Reckitt. To do so would risk losing the invest firm its seat on Reckitt’s board.
Reckitt’s shares fell 44p to £46.13 in early trading on Friday.