- Mondelez International has signed a complex deal with D.E. Master Blenders 1753 BV that will give it a 49% stake in a new, global giant in the coffee business.
- Under the terms of the arrangement, Mondelez surrenders its coffee brands -- including Gevalia, Carte Noire, and Jacobs -- in exchange for $5 billion and partial ownership of a new company, dubbed Jacobs Douwe Egberts. D.E. Masters' coffee brands -- including Senseo, Pilao, and Douwe Egberts -- will also join the company.
- The newly created company, to be based in the Netherlands, becomes the world's largest pure play coffee company.
This is an extraordinary deal that creates an extraordinary company. The new Jacobs Douwe Egberts will have an excess of $7 billion a year in revenue. More importantly, it becomes the second-largest coffee company in the world, trailing only the coffee brands controlled by Nestle SA.
Nestle, of course, is the big loser in this deal. The Swiss company has greatly struggled in the coffee game of late. It's placed big bets on its Nespresso single-serve product, which suffers from copy-cat sales in Europe and has failed to gain traction in the U.S.
Nestle has launched a new, larger brewer to appeal to American tastes. But the company faces an uphill battle against the U.S. market leader, Keurig Green Mountain.