United Photos/ReutersD.E. Master Blenders 1753 is the Dutch owner of Douwe Egberts coffee.
5:56 a.m. | Updated
LONDON — The German consumer products conglomerate Joh. A. Benckiser agreed on Friday to buy D.E. Master Blenders 1753, a European coffee company, for 7.5 billion euros, or $9.8 billion.
Under the terms of the deal, Benckiser, which already owns a 15 percent holding in the company, has offered 12.5 euros a share for D.E. Master Blenders, the Dutch owner of Douwe Egberts coffee and other brands.
The bid is less than the 12.75 euro-a-share price that first was disclosed when the companies said they were in talks last month, though it is slightly higher than D.E. Master Blenders’ closing share price on Thursday.
The move is part of Benckiser’s efforts to expand its growing coffee empire, and is one of the largest deals announced so far this year in Europe.
Benckiser, which is an investment vehicle for the wealthy Reimann family of Germany, acquired Caribou Coffee and Peet’s Coffee Tea last year for a combined $1.3 billion.
While those deals gave Benckiser inroads into the coffee shop market, the acquisition of D.E. Master Blenders will allow it to branch out into the home coffee sector.
D.E. Master Blenders was spun out of Sara Lee last summer and competes against consumer giants like Kraft and Nestle in the global coffee industry. It makes coffee pods for Nespresso machines and owns coffee and tea brands. The company’s board said it backed the multibillion-dollar offer.
“Joh. A. Benckiser and its partners intend to use D.E. Master Blenders as their platform for both organic growth as well as acquisitions in the fast moving consumer goods coffee and tea categories,” the company’s chairman, Bart Becht, said in a statement Friday.
The takeover of D.E. Master Blenders comes at a difficult time for European deal makers.
Local companies and their advisers have struggled during a lackluster start to the year, as confidence across the Continent has been hit by the recent banking crisis in Cyprus. In the first quarter of the year, announced mergers and acquisitions across the Continent fell 20 percent, to $181 billion, from the same period in 2012, according to the data provider Thomson Reuters.
In early morning trading in Amsterdam on Friday, shares in D.E. Master Blenders fell less than 1 percent, though the company’s stock price has risen almost 30 percent since a potential deal was first announced on March 28.
Analysts said the proposed deal still represented good value for investors, though the fact the Benckiser had lowered its initial offer took some by surprise.
“It’s a good deal, but slightly disappointing,” said Marco Gulpers, an analysts at ING Financial Markets in Amsterdam. “If the indicative price was set at 12.75 euros, you would expected management to negotiate for a higher price.”
Benckiser is financing the deal through a combination of 3 billion euros of debt and 4.9 billion euros of equity, according to a statement from the companies. The advisory firm BDT Capital Partners founded by Byron D. Trott is providing an undisclosed minority stake of the equity.
Although the proposed deal is expected to be put to D.E. Master Blenders’s shareholders by July, the Dutch coffee company said it reserved the right to cancel its support for the takeover if another higher offer was submitted.
Lazard acted as lead adviser to D.E. Master Blenders on the deal, while Goldman Sachs and JPMorgan Chase also advised the company. Leonardo Company, BDT Company, Rabobank/Rothschild, Bank of America Merrill Lynch, Citigroup and Morgan Stanley advised Benckiser and its partners.
Article source: http://dealbook.nytimes.com/2013/04/12/benckiser-to-buy-d-e-master-blenders-for-9-8-billion/?partner=rss&emc=rss