17 Jul

Jacobs Douwe Egberts: What It Took to Seal the Deal

WRITTEN BY Sharon Bailey FEATURED IN M&A and Event Driven

Jacobs Douwe Egberts

Jacobs Douwe Egberts is the new Netherlands-based coffee company formed in early July by combining Mondelez International (MDLZ) and D.E Master Blenders 1753.

This mega deal, initially announced on May 7, 2014, got conditional approval from the European Commission (or EC) on May 5, 2015. Mondelez’s stake was reduced from the initial estimate of 49% to 44%, since the company retained its interest in its Korea-based joint venture Dongsuh Foods Corporation.

Jacobs Douwe Egberts: What It Took to Seal the Deal

Leading position

As you can see in the above chart, Mondelez held leadership positions in the coffee market in ten regions, including France, Ukraine, and Sweden. D.E Master Blenders had leadership positions in six countries, including the Netherlands, Norway, and Belgium. Mondelez makes up about 0.4% of the portfolio holdings of the SPDR S&P 500 ETF (SPY).

According to Jacobs Douwe Egberts’s website, the company holds either the number-one or number-two position in coffee markets for more than 18 countries in Europe, Latin America, and Australia.

Conditions of the deal

In May 2015, the joint venture between Mondelez and D.E Master Blenders received a nod from the EC, subject to the following conditions:

  • divest the Carte Noire brand in the European Economic Area
  • divest the Merrild brand in Denmark and the Baltics
  • provide licensing of the Senseo brand to a third party in Austria

Portfolio of the new entity

Along with owning key brands like Jacobs, Pilio, Maxwell House, and Tassimo, Jacobs Douwe Egberts also owns Mondelez’s Tassimo brewing system and D.E Master Blenders’ Senseo brewing system. These brewing systems face major competition from Nestlé’s (NSRGY) (NESN.VX) Dolce Gusto and Nespresso brewing systems, Keurig Green Mountain’s (GMCR) coffee brewers, and Starbucks’s (SBUX) Verismo System.

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