Master Blenders acquisition delayed by shareholder approval

LONDON Fri Aug 23, 2013 12:12pm EDT

Cups are seen at a Douwe Egberts coffeeshop in Amsterdam, April 12, 2013. REUTERS/Toussaint Kluiters/United Photos

Cups are seen at a Douwe Egberts coffeeshop in Amsterdam, April 12, 2013.

Credit: Reuters/Toussaint Kluiters/United Photos

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LONDON (Reuters) - Joh A Benckiser's (JAB) 7.5 billion euro ($10.01 billion) takeover of Dutch coffee and tea company D.E Master Blenders 1753 has been delayed as the company struggles to secure 95 percent shareholder acceptance, bankers sources said on Friday.

German investor JAB announced plans to buy the Dutch listed company in April. It launched a formal takeover process in June and gave shareholders until August 15 to accept. <ID: nWEB006YT>

The deadline has been extended by a month to September 17 after only 89.7 percent of shareholders agreed to the deal by the original deadline of mid August, according to an SEC filing on August 16.

JAB could not immediately be reached for comment.

If JAB secures 95 percent shareholder acceptance in the month to September 17, the acquisition will complete as planned, sources said.

If the acceptance level remains below 95 percent, lenders will need to agree a waiver to change the loan documentation in order to allow the acquisition to complete.

Some lenders could seek legal advice if a waiver is issued, as they are concerned that dissenting shareholders could challenge the acquisition, the sources said.

A 3.3 billion euro syndicated loan backing the acquisition has already been syndicated and allocated to lenders as banks wanted to get the risk off of their balance sheets. <ID: nRLP19290a>

The loan was fully underwritten by Bank of America Securities, Citibank, Rabobank and Morgan Stanley.

The loan will be unfunded until the acquisition closes. If a waiver is issued, the arranging banks are expected to put pressure on lenders to agree it to avoid the financing collapsing and losing out on large underwriting fees, the sources said.

"Given the fees the underwriters could lose out on, they will make sure the deal gets done. There is also the issue of their pride," one of the sources said.

JAB, the investment vehicle of the billionaire Reimann family, has been building a hot drinks business in a bid to tap strong growth driven by new products, such as single-serve coffee brewers, and demand from emerging markets.

It owns Caribou Coffee Co and Peet's Coffee & Tea in the United States, and had its eye for some time on D.E Master Blenders, which has a strong position in Europe.

JAB raised its stake in D.E Master Blenders in October to just over 15 percent, after the Douwe Egberts coffee business was spun out of Sara Lee.

The JAB investor group includes JAB Forest B.V., BDT Oak Acquisition Vehicle, L.P. (an investor group led by BDT Capital Partners), Societe Familiale Investissements S.A. and entities advised by Quadrant Capital Advisors, Inc. ($1 = 0.7493 euros)

(Editing by Tessa Walsh)

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