DE Master Blenders and Mondelez seek bidders for French brands
The owners of Café Grand’Mère and L’Or have solicited potential bidders for the French coffee brands, according to people familiar with the matter.
The move comes as owners DE Master Blenders 1753 and Mondelez International’s coffee unit are racing to win antitrust approval for a joint venture that would help them take on global rival Nestlé.
A deal from Café Grand’Mère and L’Or, which makes capsules that can be used in Nestlé’s Nespresso machines, could fetch about €480m.
One person said the two businesses make €60m in combined earnings before interest, tax, depreciation and amortisation. The owners are likely to seek a multiple of about 8 times ebitda for the units, this person added.
DE Master Blenders and Mondelez have hired Lazard to help with the asset sale.
A potential sale is intended to help DE Master Blenders and Mondelez win French regulatory approval for their May deal that will create a global coffee powerhouse with combined revenues of $7bn.
Potential buyers include private equity groups PAI Partners, Bain, CD&R, Ardian and Cinven. Strategic bidders include Strauss, the Israeli foods group, and Italy’s Massimo Zanetti Beverage Group, which is gearing up to raise capital for acquisitions via an initial public offering later this year.
Under the terms of the May deal, US snacks group Mondelez will receive $5bn in cash from DE Master Blenders for its coffee business and a 49 per cent equity stake in the new company, to be called Jacobs Douwe Egberts.
The combined company will bring together the world’s second and third-largest coffee groups, which own brands including Jacobs, Carte Noire, Gevalia, Kenco and Millicano – and hold top market share in more than two dozen countries.
Analysts have said the combined businesses will control nearly 60 per cent of the market in France, which may bring greater regulatory and union scrutiny than in other countries.
DE Master Blenders and Mondelez structured the deal so that their combined French units would be acquired by a separate holding company, in anticipation of regulatory pressure that might have otherwise slowed the entire deal from closing.
The composition of assets for sale may change based on guidance from European regulators and other stakeholders.
The Mondelez deal is the most significant yet by JAB Holdings, the investment arm of the billionaire Reimann family, in its challenge to Nestlé. JAB and Lazard declined to comment.
JAB took over DE Master Blenders for €7.6bn last year, following the $340m acquisition of the Caribou Coffee chain and the Peet’s Coffee & Tea chain for $1bn.