Germany’s billionaire Reimann family on Monday said it will buy coffee capsule maker Keurig Green Mountain coffee for $13.9 billion to create the world’s second-largest coffee maker.
The Reimanns are scions of a German chemical industry fortune, who expanded the group over the last two decades into coffee and fashion brands such as Bally and Jimmy Choo.
Known as reclusive, the Austrian and German billionaires run a holding company called JAB that is located in Austria.
JAB, which stands for Joh. A. Benckiser, the 19th century founder of what became a chemical industry empire, is worth €17.6 billion, up €3.6 billion this year, according to Manager-Magazin, a German business publication.
JAB already owns coffee brands such as Jacobs, Senseo and Tassimo. The purchase of Keurig, a specialty coffee and coffee machine maker, is a joint venture with investors who are also already involved in Jacobs Douwe Egberts coffee company. Among the backers is Mondelez International, the U.S. food group formerly known as Kraft Foods and owner of brands such as Cadbury chocolate and Trident toothpaste.
JAB Holding has amassed expertise in coffee through its acquisitions and owns the world’s second-largest coffee company, Jacobs Douwe Egberts.
JAB said it would pay $92 per share, a 78 percent premium from the close of trading on Friday. Following the announcement, Keurig’s shares jumped to $89, up 73 percent. In May, Keurig shares were worth $92 but they had fallen by 60 percent since then.
The move stirs competition in the coffee market and was greeted by analysts as a sign of further consolidation.
“JAB … has been particularly interested in the premium end of the US coffee market,” said Virginia Lee, a senior beverages analyst at Euromonitor International.
After acquiring Peet’s Coffee & Tea and Caribou Coffee Company, in 2012, JAB added Stumptown Coffee Roasters and Intelligentsia, two smaller premium coffee shop brands, in 2015.
“JAB Holding Co’s purchase of Keurig Green Mountain is positive for Keurig and The Coca-Cola Company who had purchased a 16 percent stake in the coffee company,” said Ms. Lee. She noted that by taking the company private, Keurig will be able adjust its marketing and product development strategy away from the scrutiny of the investment community.
Ms. Lee noted that Keurig has seen reduced demand for its coffee pod machines as well as heightened competition from private label makers of fresh ground coffee pods.
JAB Holding has amassed expertise in coffee through its acquisitions and owns the world’s second-largest coffee company, Jacobs Douwe Egberts. “The Keurig acquisition signals continued consolidation in the global coffee market,” Ms. Lee said.
Keurig, which is also part-owned by Coca Cola, is based in Vermont and the company’s revenues fell 4 percent to $4.5 billion during the 2015 business year ending in September while net profits fell 16 percent to $498 million. The company has 6,600 employees.
The transaction is to be completed in the first quarter of 2016 and Coca Cola announced it would be paid for its 17.4 percent holding, estimated at $2.4 billion, in cash.
Earlier this year, the Reimanns outbid Henkel in a bidding war for Wella. Procter & Gamble (P&G) sold the German maker of haircare products to Coty, the perfume company from the United States in which the Reimanns are the main shareholder.
Bart Becht carried out this deal and has brokered many others for the Reimann family. Formerly head of Reckitt Benckiser, Mr. Becht is the Reimann family’s most important manager and is currently interim boss of Coty.
The Reimanns, a reclusive family from the Rhine region, originally gained their wealth through the sale of their inheritance of the Benckiser chemical company, and used the money for major deals. The Reimanns originally sought to acquire luxury brands like Jimmy Choo, a shoemaker, but they are now focusing on coffee and consumer goods. JAB’s path to growth hasn’t been entirely unobstructed with a failed bid for cosmetics maker Avon in 2012.
But it seems clear that the Reimanns and Mr. Becht won’t shy away from making a stir with big, risky deals in order to grow.
Handelsblatt’s Christoph Kapalschinski covers companies and markets. Allison Williams is deputy editor in chief of Handelsblatt Global Edition. To contact the authors: email@example.com, firstname.lastname@example.org