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UPDATE 3-German investor close to bid for Douwe Egberts firm -source
April 11, 2013 / 7:51 PM / in 5 years

UPDATE 3-German investor close to bid for Douwe Egberts firm -source

* JAB bid could come before the weekend -source

* Bid likely around 12.75 euros/share -source

* JAB aims to create global coffee empire

* D.E Master Blenders JAB unreachable for comment (Adds valuation, analyst comment)

By Sara Webb

AMSTERDAM, April 11 (Reuters) - German investor Joh A Benckiser is close to making a formal bid for D.E Master Blenders 1753, owner of Douwe Egberts coffee, a source close to the situation said, in a deal valuing the Dutch firm at about 7.6 billion euros ($10 billion).

JAB, the investment vehicle of the billionaire Reimann family, wants to create a global coffee brand on a par with global leader Nestle SA, bolstering its position in a hot sector driven by new products and the growing middle classes in many emerging markets.

It has already built up a portfolio of coffee brands including Caribou Coffee Co Inc and Peet’s Coffee & Tea Inc in the United States, and wants to buy D.E Master Blenders, which has a strong position in Europe, to create a global coffee empire.

JAB could make its offer of around 12.75 euros per share before the weekend, said the source, who requested anonymity as the discussions were in the final stages.

Neither JAB nor D.E Master Blenders were immediately reachable for comment.

D.E Master Blenders said on March 28 it was in talks with JAB - already its biggest shareholder with a stake of more than 15 percent - about a 12.75-euro-per-share offer.

That price represented a premium of nearly 33 percent to the stock’s prior close, and the news pushed the stock to a high of 12.60 euros.

Analysts have said they do not expect JAB to sweeten its offer. On Thursday, D.E Master Blenders’ shares closed up 0.91 percent at 12.23 euros.

Marco Gulpers, analyst at ING, said in a report this week that a deal was “highly likely” and that he did not expect a rival offer.

“The price is full in our view,” he said, referring to the 12.75 euro per share price that D.E Master Blenders had previously disclosed. He said that price was 15.4 times the ratio of enterprise value (EV) to earnings before interest, tax, depreciation and amortisation (EBITDA) for 2013.

Based on 2012 reported results, he said JAB was offering 19.3 times EV/EBITDA for D.E Master Blenders, compared with 20 times EV/EBITDA for Peet’s which JAB bought last year, adding that “Peet’s has higher growth.”


Market leader Nestle’s coffee sales had a retail value of $17.12 billion last year, while Mondelez International Inc ranked second at $8.32 billion, according to Euromonitor International.

D.E Master Blenders, which also owns Senseo coffee and Pickwick Tea, ranks third with annual sales of about 2.66 billion euros.

The Dutch coffee and tea company had a rocky start since it was spun off last year from Sara Lee Corp, which has since changed its name to Hillshire Brands Co.

Within weeks of its listing on the Amsterdam stock exchange, it shocked investors with news that its Brazilian business had been hit by fraud, tax and inventory issues, forcing it to restate past financial statements.

Its chief executive, Michael Herkemij, quit in December just six months after the stock market debut, and was replaced by Jan Bennink. And in February, the firm reported lower-than-expected profit and cut its outlook for 2013, citing pricing pressures in Europe. ($1 = 0.7618 euros) (Additional reporting by Martinne Geller; editing by Gary Hill, Tim Dobbyn Bernard Orr and Matthew Lewis)

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