Master Blenders Wins Conditional EU Backing for Mondelez Bid

Updated on

D.E Master Blenders 1753 BV won conditional European Union approval for a $5 billion deal to create the world’s second-biggest coffee company, rivaling Nestle SA.

The European Commission said proposed asset sales allayed competition concerns over plans by JAB Holding Co., the investment arm of the billionaire Reimann family, to combine its Master Blenders arm with Mondelez’s coffee unit.

“Today’s decision will ensure that consumers can continue to enjoy a variety of coffee brands and types at competitive prices,” EU Competition Commissioner Margrethe Vestager said in a statement on Tuesday.

Mondelez will sell its Carte Noire business in Europe, while Master Blenders will sell its Merrild business in Europe and license its Senseo brand in Austria, the commission said.

The move is the latest step from JAB to consolidate in coffee. The company in 2013 bought Master Blenders, the Amsterdam-based maker of Douwe Egberts, for about 7.5 billion euros ($8.3 billion), the industry’s biggest deal ever. Mondelez will gain a 49 percent stake in the new company, which will be named Jacobs Douwe Egberts and based in the Netherlands.

The deal is expected to close “in the course of 2015, subject to remaining closing conditions,” the companies said in a statement.

“The partnership will allow us to continue to participate in the growth of the coffee category, while enabling us to focus our resources on our core snacks categories of chocolate, biscuits, gum and candy,” Irene Rosenfeld, chief executive officer of Mondelez International, said in a statement.

Approving the transaction without conditions would “have led to price increases in roast and ground coffee products in France, Denmark and Latvia, as well as in filter pads in Austria and France,” the EU said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE