Nestle to pay Starbucks $7.15 bn for rights to sell its products worldwide
While Starbucks holds the crown in the $13.8 billion US coffee market, Nescafe and Nespresso hold the top ranks globally, according to Euromonitor Nestle SA and Starbucks Corp. are joining forces to rejuvenate their coffee empires. Nestle will pay the Seattle-based chain $7.15 billion upfront in cash for the rights to sell Starbucks coffee products in retail and food-service channels, the companies said Monday. Nestle will use the Starbucks brand in its Nespresso and Dolce Gusto capsule systems next year. The deal is Nestle’s first tie-up with a major rival in coffee. Nestle expects the deal to contribute positively to its earnings per share and organic growth targets from 2019. The business has annual sales of $2 billion. Starbucks said it will use the proceeds to accelerate share buybacks, now expecting to return about $20 billion through repurchases and dividends through fiscal 2020. The alliance underlines Nestle’s efforts to capture more upscale java drinkers...
