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Breakingviews: M&A at Mondelez

Wednesday, May 07, 2014 - 02:58

May 7 - The consumer giant is selling its coffee unit and restructuring its cookies and chocolates business. Breakingviews editors discuss how this may set it up for more deals - with Pepsi, perhaps.

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There's big news outlet for you coffee lovers. Dahlia -- is buying among blazes that coffee business mesh -- together and forming a seven billion revenue giant. -- witness this morning echoes of the big businesses that Nelson Peltz on the Baltimore let them. I've just possibly make a dent -- calls aggressive it makes marvelous. Look it's gonna have 85% of its revenues from snacks as a lots of us are all right simple way he's got -- -- -- and a maximum of whatever it is you. Jacobs business. They gets five billion dollars in cash which they say they're gonna target for buybacks but obviously creates liquidity in the company. It gives them I think 4% of the new company -- -- the same time they also announced a huge restructuring. And one that's gonna lead to one point five billion of cost cuts by twenty teens -- what you seen is the stock is up 8%. You that it five billion dollars of market cap to mom lives with -- And obviously the elephant in the room is -- question about what this does in terms of my abilities and Pepsi which is was Nelson Peltz whose idea. Maybe about a year ago he had to be presentations are pushing for it. He stepped back from that idea that you have to wonder whether or not at this point. You know cleaning up model is at least to this two step fashion critic coffee and also do this massive cost a kind of. A great audition yeah I mean that that's the point that the sort of next day's stories that -- to -- some -- the position. To buying the Pepsi snacks business or merged -- the Pepsi snacks business to create its own. Cost synergies -- kind of stuff which which the shareholders liked him. But yet. But -- in the first instance they they're cleaning up their own portfolio I mean I'm any sort of you can't tell exactly what the market likes his so much is it because they are getting fight -- they take in this. What you thought it was a sort of second -- com -- and sorry that's what it is and you've turned it into -- were five billion plus 40%. Can't educate our -- are talking can't announcement that it -- said that if you look at previous deals including the -- -- -- It'll say Folgers deal last year. This new company to between ten and twenty billion dollars just based on the haven't -- -- More focus yet at a price of coffee now as opposed to be lost within the cookie -- -- Let me see Hillary get to if if it's ten tightening militants -- cash and a forty not to -- of something that economically and everybody -- -- mean it's just think back to the big picture okay so you're getting -- a beverage business sense of profit businesses even if it is dry race car. You are splitting away from the snack business like there's blueprint for -- right there forever and Health Department has always been that. They were never getting enough credit for their own snacks business now here's again up to the door opens again for at least for the question. You know putting putting those two businesses together so -- well thanks Jeff thanks -- will be watching that to see. What do they it was Nelson -- and have -- Sam will be back with more breaking -- tomorrow.

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Breakingviews: M&A at Mondelez

Wednesday, May 07, 2014 - 02:58