JAB: Peet’s feat
Holding company uses virtual roadshow to sell shares in coffee shops when most of them are closed
You have to hand it to JAB. Pulling off Europe’s biggest IPO since 2018 on the back of a three-day virtual roadshow is quite something. Even more impressive is the feat of selling shares in coffee shops when most of them are closed. Are the buyers of shares in JDE Peet’s similarly astute?
JAB, which manages the wealth of the Reimann family, spent several years buying and rolling up coffee acquisitions, from pods (Keurig Dr Pepper) to filter (Douwe Egberts) to cafés (Peet’s). The spin-off entity comprises the last two, with a split of roughly 80/20 between at-home drinking and cafés.
Shares were priced on Friday at the upper end of the proposed range. At €31.50 the newly fledged company is valued at €16.8bn ($18.6bn). JAB will remain the company’s largest shareholder. Providing an extra shot of caffeine, investors propelled shares a further 12 per cent higher in morning trading. The offer price represents about 11 times last year’s ebitda of about €1.5bn-€1.6bn and, depending on growth projections, a multiple of 10-13 times for this year.
In the absence of pure-play coffee peers, Swiss food giant Nestlé — trading on 17 times this year’s consensus ebitda — offers the nearest comparison. Even allowing for JDE Peet’s less geographically and product-diverse portfolio, that implies a more than decent discount. Some of that is still justified. The pandemic has brought new risks to the world. Even after lockdowns ease, unemployment and smaller wage packets will curb thirst for takeaway cappuccinos.
Coffee habits may ultimately revert to pre-pandemic norms, but the IPO process will surely change for the long term. JDE Peet’s brought in cornerstone investment worth €100m, unusual for a European deal. If an offering of this size and global reach can be carried out over Zoom video conferences there is little reason to revert to the usual manic, and expensive, dash around a dozen cities in half as many days.