Nestlé has entered an agreement with Starbucks for the perpetual global license of the gastronomy chain's consumer and foodservice products.
Vevey/Switzerland — The two companies will work closely together on innovation and go-to-market strategies, the Swiss company announced. As a complete provider of coffee solutions, the company intends to accelerate growth in out-of-home channels. Additionally, the transaction would provide Nestlé with a strong platform for continued growth especially in North America. The Starbucks cafés are not included in the agreement.
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 would facilitates a smooth and efficient integration. The group expects this business to contribute positively to its earnings per share and organic growth targets as from 2019.
The coffee business is Nestlé’s largest high-growth category. Therefore Mark Schneider, CEO, Nestlé, describes the transaction as a historic deal for this product segment. With Starbucks, Nescafé and Nespresso the partners bring together three iconic brands, he said.
The company is also taking over approximately 500 Starbucks employees. Operations will continue to be located in Seattle. The agreement is subject to customary regulatory approval and is expected to close by the end of 2018. The agreement excludes Ready-to-Drink products and all sales of any products within Starbucks coffee shops.