Nestle pays $7.15 billion to license Starbucks products

Above, two women walking out of a Starbucks coffee shop in Beijing. Swiss food giant Nestle will $7.15 billion for the rights to market Starbucks products around the world. (AFP)
Updated 07 May 2018
0

Nestle pays $7.15 billion to license Starbucks products

ZURICH: Nestle will pay Starbucks $7.15 billion as part of a global coffee alliance in which the Swiss-based food giant is getting the rights to market the US coffee company’s products around the world outside Starbucks’ coffee shops.
Starbucks said on Monday it will use proceeds to speed-up share buybacks and the deal would add to earnings per share (EPS) by 2021 at the latest. Nestle saw the deal adding to earnings by 2019.
Nestle and Starbucks are joining forces in a highly fragmented consumer drinks category that has seen a string of deals lately.
JAB Holdings, the private investment firm of Europe’s billionaire Reimann family, has fueled the consolidation wave with a series of deals including Douwe Egberts, Peet’s Coffee & Tea and Keurig Green Mountain, narrowing the gap with Nestle.
“This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestle,” said Starbucks Chief Executive Kevin Johnson.
Coffee is popular with millennials who have grown up with Starbucks and often seek out smaller brands. A willingness to pay up for exotic beans and specialty drinks means companies can brew up richer profit margins than in mainstream packaged food.
Starbucks plans to use the proceeds to accelerate share buybacks and now expects to return approximately $20 billion in cash to shareholders in the form of share buybacks and dividends through fiscal year 2020, it said.
It said the transaction was expected to add to earnings per share by the end of fiscal year 2021 or sooner, with no change to the company’s currently stated long-term financial targets.
In a separate statement, Nestle said it expected the business to contribute positively to its earnings per share and organic growth targets from 2019.
Nestle, which will take on about 500 Starbucks employees as part of the deal, says its ongoing share buyback program would remain unchanged.


Aramco CEO attends China development event

Aramco CEO Amin Nasser meets Chinese Premier Li Keqiang during the China Development Forum 2019. (Photo/Supplied)
Updated 58 min 55 sec ago
0

Aramco CEO attends China development event

Aramco CEO Amin Nasser attended the China Development Forum, a three-day event that focused on key issues such as the supply-side structural reform, new measures of proactive fiscal policy, and the opening up of the financial sector and financial stability. 

The Aramco chief met the Chinese Premier Li Keqiang during the forum. Li expressed his appreciation for Saudi Aramco’s investment in an integrated downstream project in Panjin city in Liaoning, coming right after the visit of Crown Prince Mohammed bin Salman to China in February. 

The exchange also allowed Nasser to briefly outline Aramco’s plans in China including downstream investments in Zhejiang province.