Frothy bids

12 April 2013 By Quentin Webb

The former Reckitt chief is leading a buyout of D.E Master Blenders 1753, the Douwe Egberts coffee house. The hot drinks world should get a jolt. Like Warren Buffett’s recent mega-bid for Heinz, this deal mixes consumer goods, cheap debt and billionaire backers.

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On April 12, D.E Master Blenders 1753, the Dutch coffee and tea company, said it had agreed to be bought by a group led by Joh A Benckiser (JAB), the investment vehicle of Germany’s billionaire Reimann family.
JAB has offered 12.50 euros a share including a dividend. That values all of D.E Master Blenders’ equity at about 7.5 billion euros ($9.8 billion). The offer is 25 cents per share below the price indicated on March 28, when the two sides first revealed they were in talks. D.E Master Blenders expects the deal to close in July or August. Jan Bennink, chairman and interim chief executive, will step down.
JAB will finance the deal with 3 billion euros of debt, provided by Bank of America, Citibank, Rabobank, and Morgan Stanley, and 4.9 billion euros in equity. Some equity will come from Byron Trott’s BDT Capital Partners, and some from Belgian and Colombian brewing dynasties that helped form Anheuser-Busch InBev and SABMiller.
D.E Master Blenders, owner of the Douwe Egberts and Senseo brands, operates across Europe, Brazil, Australia and Thailand. It was spun off from U.S. food group Sara Lee in June last year, after which the parent company was renamed Hillshire Brands.
JAB, chaired by former Reckitt Benckiser Chief Executive Bart Becht, already owns 15.05 percent of D.E Master Blenders. It has also bought U.S. coffee-shop chains Caribou Coffee Co Inc and Peet’s Coffee & Tea Inc.

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