* D.E Master Blenders says gets bid approach from JAB
* Says JAB proposing 12.75 euros per share
* JAB is firm's top shareholder, owns other hot drinks
* D.E Master Blenders says opens books, no certainty of deal
* Shares jump more than 25 pct
(Adds background; Recasts first paragraph)
By Sara Webb
AMSTERDAM, March 28 D.E Master Blenders 1753
said on Thursday it received a 6.4-billion-euro ($8.2
billion) takeover offer from German investor Joh A Benckiser
(JAB), sending shares of the Dutch coffee and tea maker up more
than 25 percent.
The maker of Douwe Egberts coffee and Pickwick tea said it
had agreed to open its books to JAB based on JAB's proposal to
pay 12.75 euros for every share it does not already own. That
represents a nearly 33 percent premium to the shares' prior
closing price and values the entire company at around $9.7
The company noted that talks were at an early stage and
there was no guarantee of a deal. Its shares closed at 12.05
euros in Amsterdam. Before this, the stock had moved little
since last year's spin-off from Sara Lee.
JAB, the investment vehicle of the billionaire Reimann
family, is already D.E's top shareholder. Taking over the
company would further cement JAB's standing as a powerhouse in a
hot drinks industry benefiting from innovation and emerging
JAB has been building a portfolio of brands including
Caribou Coffee Co Inc and Peet's Coffee & Tea Inc
, taking advantage of growth in a category being
fueled by new products like single-serve coffee brewers and
demand from emerging middle classes in developing markets.
"We would envisage a very high chance of a transaction
here," said research firm Olivetree in a note, noting that JAB
already owned at least 15 percent of D.E Master Blenders and
other bidders had not surfaced at the time of the spin-off.
However, they said companies like Mars and Tchibo had been
mentioned as potentially interested parties.
D.E Master Blenders, which also makes Senseo coffee pods and
machines, was spun off last year by U.S. group Sara Lee, now
known as Hillshire Brands. According to Euromonitor, it
is the No. 3 global coffer player after Switzerland's Nestle
, the market leader, and U.S.-based Mondelez
International, which used to be called Kraft Foods
before it spun off some businesses into Kraft Foods Group Inc
By contrast, the market in the United States is dominated by
Green Mountain Coffee Roasters Inc, J.M. Smucker Co
, which makes Folgers, and Starbucks Corp,
Euromonitor says. D.E does not currently have much business in
the United States.
Even though the company has a sizeable business in Brazil it
has struggled to benefit from a growing global industry. It has
a high exposure to austerity-hit European markets, where price
increases, put through to offset soaring coffee costs, hurt
The Dutch firm said it was being advised by investment banks
Goldman Sachs, Lazard, and JP Morgan, and by lawyers Allen &
Overy. A spokeswoman for JAB declined to comment.
The indicated price values D.E Master Blenders at a forecast
2013 EV/EBITDA (or the ratio of enterprise value to earnings
before interest, tax, depreciation and amortisation) of 16
times, Nomura analysts said in a research note, and a forecast
2013 price/earnings multiple of 24.3.
"As a benchmark, the recently-concluded Heinz deal by 3G was
at a 2013 EV/EBITDA of 14.6 times," Nomura said.
Even prior to the bid approach, D.E Master Blenders' shares
had traded at a premium to peers, partly on speculation that JAB
would increase its stake or eventually make an offer for the
firm, and on hopes that a new chief executive, who took over in
December, would turn around its performance.
The Reimann fortune comes from the Benckiser chemicals
company, founded in 1823 and one of the predecessor companies of
London-based Reckitt Benckiser Group Plc. The family also
controls fashion group Coty, and owns Labelux Group,
manager of luxury brands Bally, Belstaff and Jimmy Choo.
JAB agreed to buy Caribou Coffee Co Inc for about $340
million in December, after snapping up Peet's Coffee & Tea Inc
for about $1 billion in July.
It raised its stake in D.E Master Blenders in October to
just over 15 percent, although Olivetree said the company could
have since upped that to just under 20 percent.
Last month, D.E Master Blenders posted lower-than-expected
profits and cut its outlook for 2013, blaming pricing pressures
in Europe. It has also experienced higher-than-expected costs at
its troubled Brazilian business, which was hit by fraud, tax and
inventory issues forcing D.E Master Blenders to restate past
($1 = 0.7824 euros)
(Additional reporting by Martinne Geller, Gilbert Kreijger,
Ivana Sekularac and Simon Jessop; Editing by Mark Potter,