Mondelēz and D.E Master Blenders 1753 team up to create ‘world’s leading pure-play coffee company’

By Elaine WATSON

- Last updated on GMT

Mondelēz and D.E Master Blenders 1753 team up to create ‘world’s leading pure-play coffee company’
Mondelēz International - the snack food business that spun off from Kraft in 2012 - is to merge its coffee portfolio with that of D.E Master Blenders 1753 to create “the world's leading pure-play coffee company”.

The joint venture - to be based in the Netherlands - will be called Jacobs Douwe Egberts and brings together some of the world's leading coffee brands, including Jacobs, Carte Noire, Gevalia, Kenco, Tassimo and Millicano from Mondelēz International; and Douwe Egberts, L'OR, Pilao and Senseo from D.E Master Blenders 1753.

It is expected to bring in annual revenue of well over $7bn in the first year. (In 2013, Mondelēz International's coffee business generated approximately $3.9bn in revenue, while D.E Master Blenders 1753 generated approximately $3.4bn.

The deal is expected to close in 2015. Upon completion, Mondelēz will receive about $5bn in cash and a 49% stake in the new company, while AHBV (which is owned by an investor group led by JAB Holding Company s.a r.l.) will hold a majority share, said Mondelēz CEO Irene Rosenfeld.  

“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​."

She also announced a restructuring plan, which will include job cuts and changes to the supply chain structure at Mondelēz .

“These strategic and cost-reduction actions will strengthen our core snacking business, simplify our operations and enhance our ability to deliver world-class margins​.”

“At the same time, our shareholders will continue to share in the future growth of the coffee category through our ownership interest in an advantaged, more focused coffee company.”

In the first quarter, Mondelēz reported $8.6bn in revenue, down 1.2% from the same period a year ago. Net income was $842m, up 1.1%.

The new company's executive leadership team will be named at a later date. Click HERE​ for more information.

Related topics: Manufacturers

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