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PARIS/LONDON (Reuters) - Mondelez International Inc and D.E Master Blenders 1753 are considering options including a possible sale of French coffee brands L'Or and Grand Mere as they prepare to merge their coffee businesses, sources familiar with the matter said.
The companies said in May they would form a joint venture, controlled by D.E Master Blenders' private parent JAB Holding Co., which would be the world's No. 2 player behind Nestle.
The companies have hired Lazard to advise on strategic options for the two French brands, according to three sources familiar with the matter. The options could include, but are not limited to, a sale, they said.
It was not immediately clear how big the brands are or why they may be sold. L'Or, which makes capsules compatible with Nestle's Nespresso system, is currently owned by D.E Master Blenders. Grand Mere, first introduced in 1950, is owned by Mondelez. It is known for its smiling grandmother icon.
JAB, the investment arm of Germany's billionaire Reimann family, and Mondelez declined to comment. Lazard could not immediately be reached. The sources declined to be identified as the matter is private.
The combined company, to be called Jacobs Douwe Egberts, will be the largest pure-play coffee company but will still be much smaller than Nestle's business.
Based in the Netherlands, it will have annual revenue of more than $7 billion and brands including Carte Noir, Gevalia, Pilao and Senseo.
The deal, which would give Mondelez $5 billion in cash and a 49 percent stake in the business, is expected to close in 2015.
The global coffee business has undergone a spate of deals lately, fueled in part by the rise of single-serve capsules and consumers' growing taste for higher quality drinks.
JAB, co-run by former Reckitt Benckiser Chief Executive Bart Becht, former Mars finance chief Olivier Goudet and former Anheuser-Busch InBev Chairman Peter Harf, has bought three coffee companies since 2012.
In other industry deals this year, Coca-Cola took a stake in Keurig Green Mountain and Italian coffee company Massimo Zanetti Beverages plans to list a 30 percent stake on the market this year.
editing by Jane Baird