Nestlé enters agreement for the perpetual rights to globally market Starbucks products outside of the company's coffee shops.
This transaction will strengthen Nestlé's platform in North America with leadership positions in the premium roast and ground and portioned coffee businesses and will provide the company with new growth opportunities around the world. The two global giants will work closely together on innovation and go-to-market strategies to bring the best coffee to customers around the world.
"This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestlé,” said Kevin Johnson, president and ceo, Starbucks. "This historic deal is part of our ongoing efforts to focus and evolve our business to meet the changing consumer needs, and we are proud to work alongside a company that is committed to our shared values.”
“This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category,” said Mark Schneider, CEO, Nestlé. "With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world."
As part of this transaction, Starbucks will receive an up-front cash payment of $7.15 billion for a business which generated annual sales of $2 billion. The transaction does not include the transfer of any fixed assets, which facilitates a seamless and efficient integration. Nestlé has high expectations of a positive contribution to its earnings per share and organic growth targets as from 2019. Nestlé’s current share-buyback program will remain unchanged.
With Starbucks operations remaining in Seattle, 500 employees will join the Nestlé family to steer performance of the existing business and global expansion.
The agreement is subject to customary regulatory approval and is expected to close by the end of 2018. The agreement does not include Ready-to-Drink products and entire sales of any products within Starbucks coffee shops.