Summary
Mondelēz International, Inc. (MDLZ) has announced the completion of a significant transaction involving its global coffee businesses. On July 2, 2015, the company finalized the combination of its wholly owned coffee operations with D.E Master Blenders 1753 B.V. (DEMB) to form a new entity named Jacobs Douwe Egberts (JDE). This strategic move effectively divests Mondelēz's coffee assets, shifting its focus towards becoming a more concentrated snacking company. The company expects approximately 85% of its net revenues to be derived from biscuits, chocolate, gum, and candy following this divestiture. In exchange for its coffee businesses, Mondelēz received €3.8 billion in cash (approximately $4.2 billion USD) and retained a 43.5% equity stake in the newly formed JDE. This stake allows Mondelēz to continue participating in the coffee category's financial performance. The transaction was subject to adjustments, including considerations related to the sale of its interest in a Japanese coffee joint venture (Ajinomoto General Foods, Inc.) and the retention of its interest in a Korean joint venture (Dongsuh Foods Corporation). The finalization of purchase price adjustments is expected by the end of Q2 2016, meaning the reported cash and equity consideration, as well as the recognized gain, could still be subject to material changes.
Key Highlights
- 1Completion of the combination of Mondelēz's global coffee businesses with D.E Master Blenders 1753 B.V. to form Jacobs Douwe Egberts (JDE) effective July 2, 2015.
- 2Mondelēz received €3.8 billion (approx. $4.2 billion USD) in cash and a 43.5% equity interest in JDE.
- 3Acorn Holdings B.V., the owner of DEMB, holds a 56.5% share in JDE.
- 4The transaction repositions Mondelēz as a more focused snacking company, with approximately 85% of net revenues expected from biscuits, chocolate, gum, and candy.
- 5Mondelēz retains a significant stake in JDE, allowing continued participation in the coffee category's financial results.
- 6Consideration was adjusted to reflect the retention of a Korean joint venture interest and the sale of a Japanese joint venture interest.
- 7Finalization of sales price and related adjustments is anticipated by the end of Q2 2016, with potential for material changes to recognized gain and consideration.