Mondelēz International, the world's biggest snacks food company, said it has reached an agreement with DE Master Blenders 1753 to combine their coffee businesses to create the world’s leading pure-play coffee company, with annual revenues of more than $7 billion and an high ebitda margin.

DE Master Blenders 1753 is a leading pure-play coffee and tea company that offers an extensive range of innovative products through well-known brands such as Douwe Egberts, Senseo, L’OR, Pilão, Merrild, Moccona, Pickwick and Tea Forte in both retail and out of home markets.

The company holds a number of leading market positions across Europe, Brazil, Australia and Thailand and its products are sold in more than 45 countries.

As per the agreement, Mondelēz International will combine the operation of its wholly-owned coffee portfolio (outside of France) with DE Master Blenders 1753.

The new company, to be called Jacobs Douwe Egberts (JDE), will be based in the Netherlands. It will hold leading market positions in more than two dozen countries and have a strong emerging market presence, giving it significant revenue synergy opportunities in the
$81 billion global coffee category.

The two companies own some of the world’s leading coffee brands, such as Jacobs, Carte Noire, Gevalia, Kenco, Tassimo and Millicano from Mondelēz International and Douwe Egberts, L’OR, Pilão and Senseo from D.E Master Blenders 1753.

Commenting on the agreement, Pierre Laubies, the CEO of DE Master Blenders 1753 and prospective CEO of the combined company, said: “Jacobs Douwe Egberts will leverage the rich histories of both companies, combining our complementary geographic footprints, portfolios of iconic brands and innovative technologies to offer more people around the world more access to high-quality coffee and allowing the company to capitalize on the significant growth opportunities in a highly attractive market.”

Irene Rosenfeld, the chairman and CEO of Mondelēz International, expressed delight at the transaction and the substantial value the company expected to create for its shareholders.

Mondelēz International's coffee portfolio has outpaced market growth since 2010, thanks to innovations such as the Tassimo multibeverage on-demand brewing system and Millicano wholebean instant coffee.

“By retaining a significant stake in the combined company, we’ll continue to benefit from the future growth of the coffee category and share in the synergies and tremendous upside of this leading, one-of-a-kind coffee company,” stated Rosenfield.

In conjunction with this transaction, Acorn Holdings, owner of DE Master Blenders 1753, has made a binding offer to receive Mondelēz International’s coffee business in France.

The parties have also invited Mondelēz International’s partners in certain joint ventures to join the new company. The transactions remain subject to regulatory approvals and the completion of employee information and consultation requirements, said the statement from Mondelēz.

In 2013, Mondelēz's wholly owned coffee business generated $3.9 billion in revenue, and DE Master Blenders 1753 generated approximately $3.4 billion in revenue.

On completion of all proposed transactions, Mondelēz will receive cash of $5 billion and a 49 per cent equity interest in Jacobs Douwe Egberts.  AHBV will hold a majority share in the proposed combined company and will have a majority of the seats on the board, which will be chaired by current DE Master Blenders 1753 chairman Bart Becht.

AHBV is owned by an investor group led by JAB Holding Company.  Mondelēz International will have certain minority rights.

The transactions are expected to be completed in the course of 2015, subject to limited closing conditions, including regulatory approvals.-TradeArabia News Service