JAB seeks €2bn shot for coffee business with listing
JDE Peet’s planned Amsterdam IPO would be Europe’s largest offering this year
JAB Holdings plans to raise as much as €2bn from the Amsterdam listing of its JDE Peet’s coffee business, pressing ahead with Europe’s largest IPO this year despite the chill cast over markets by coronavirus, people with direct knowledge of the matter said.
JAB, which manages the wealth of Germany’s billionaire Reimann family, will this week unveil its intention to float the world’s largest pure-play coffee company and the biggest competitor to Nestlé in selling the beverage through retail stores, these people said.
The documents, seen by the Financial Times, will show that JDE Peet’s plans to raise €700m from the issuance of new shares, which will be used to pay down debt.
In total, JAB is hoping to raise between €1.5bn and €2bn from the IPO, with the remainder coming from existing shareholders such as food group Mondelez International, which will have the option to sell down its 26 per cent stake. JAB itself will not be selling any of its holdings and will remain the largest individual shareholder, said people familiar with the situation.
The decision to push ahead with the listing reflects JAB’s thinking that the social and economic effects of coronavirus will linger for months if not years, but that the coffee market will remain resilient. Higher demand for coffee helped to push larger rival Nestlé to its fastest quarterly growth in almost five years in the first quarter of 2020, as the pandemic gathered pace.
The IPO comes at a time when many companies across Europe and in particular in the UK have been seizing on their depressed share prices to raise capital from investors. But new listings have been limited. Earlier this month, a Norwegian videoconferencing rival to Zoom called Pexip marked a rare bright spot when it listed shares in Oslo.
For JAB, the listing is a critical test of a strategy it has pursued over nearly a decade to consolidate the global coffee industry under its managing partner Olivier Goudet.
In preparations for the IPO, JAB merged Jacobs Douwe Egberts Group, the second-largest coffee roaster globally after Nestlé, with the US retail coffee brand Peet’s, and overhauled its management.
JDE Peet’s mainly sells coffee beans and capsules through retail stores, under brands such as L’Or, Senseo, Tassimo and Kenco. Almost 80 per cent of the business involves coffee drunk at home.
But Peet’s also runs more than 250 coffee shops, many of which are closed or operating a limited service during the pandemic. And the group owns high-end specialist coffee venues such as Stumptown Coffee Roasters and Intelligentsia Coffee & Tea.
JDE Peet’s made €585m profit in 2019, down from €663m a year earlier, on €6.9bn of revenues, up from €6.7bn in 2018, according to documents seen by the FT.
JDE Peet’s is planning to tell investors that it will seek to reduce its ratio of net debt to adjusted earnings before interest, tax, depreciation and amortisation from about 3.7 times to 3 times in the next 12 months.
JAB has expanded rapidly since 2012, raising about €12bn from university endowments, sovereign wealth funds and wealthy families, but faces pressure to show it can successfully operate the businesses created by its dealmaking spree.
JAB’s portfolio spans public stakes in companies such as Keurig Dr Pepper, the coffee and soft drinks group, and Coty, the cosmetics group that has been struggling operationally and under a heavy debt burden for years. JAB also privately owns chains such as Pret A Manger, Panera Bread and Krispy Kreme.
BNP Paribas, Goldman Sachs and JPMorgan Chase are the lead banks on the JDE Peet’s deal.