Mondelez's Coffee Spin-Off Over; Gets Euro 3.8B, 44% Stake - Analyst Blog
Mondelez International, Inc. MDLZ recently announced that the pending spin-off of its coffee business to the Netherlands-based coffee company, D.E Master Blenders 1753, has been completed.
Mondelez’s coffee business (including the coffee portfolio in France) has been merged with that of D.E Master Blenders 1753, to form a new Dutch coffee company called Jacobs Douwe Egberts (JDE). Mondelez received 3.8 billion euros in cash for the divesture and a 44% stake in the combined company. Acorn Holdings B.V. (AHBV), the owner of D.E Master Blenders, will hold the remaining 56%. JDE is expected to be the world's leading pure-play coffee company generating annual revenues of more than 5 billion euros.
Mondelez announced the merger in May last year. However, previously, the company was supposed to take 49% stake in JDE. The equity share was reduced as Mondelez retained its interest in the Korea-based joint venture, Dongsuh Foods Corporation.
The merger will bring together Mondelez’s Jacobs, Carte Noire, Tassimo and other coffee brands and D.E Master Blenders’ popular Douwe Egberts, Pilao and Senseo brands, thereby creating significant revenue synergies.
Notably, in April this year, Mondelez sold its interest in a Japanese coffee joint venture to its partner Ajinomoto Co., Inc. for pre-tax cash proceeds of 27 billion yen.
The coffee divestiture will allow Mondelez to boost growth by concentrating on the core snacks portfolio, strengthen the cash position and improve margins by cutting supply chain and overhead costs. Now, 85% of Mondelez’s revenues will come from snacking categories like biscuits, chocolate, gum and candy.
Mondelez has a Zacks Rank #3 (Hold). Some better-ranked stocks in the food sector are Cal-Maine Foods, Inc. CALM, Campbell Soup Company CPB and McCormick & Company, Incorporated MKC. While Cal-Maine Foods sports a Zacks Rank #1 (Strong Buy), Campbell Soup Company and McCormick have a Zacks Rank #2 (Buy).
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