Beer and coffee anyone?
So brewers have woken up and smelt the coffee? Several families with interests in – rival – breweries have clubbed together with Germany's Joh. A. Benckiser (JAB), the investment vehicle of the Reimann family, to make a bid for Dutch company DE Master Blenders, best known for its Douwe Egberts coffee brand.
On 12 April 2013 DE Master Blenders agreed to be bought for EUR 7.5 billion (USD 9.84 billion).
JAB, which already owns a portfolio of global coffee brands, including Caribou Coffee and Pete's Coffee & Tea, is looking to build a beverage company to eventually rival Nestlé (Nescafé, Nespresso). JAB operates as a holding company and through its subsidiaries LABELUX Group GmbH, Coty Inc., and Reckitt Benckiser Group, offers household and personal care products in Germany.
JAB was already the largest shareholder in DE Master Blenders with a stake of more than 15 percent. To fully take over DE Master Blenders it led a consortium of buyers, including the Belgian families Van Damme and Van der Straten Ponthoz, who, according to the Belgian magazine Trends, had a 11.03 percent stake in AB-InBev in 2011.
Again, according to Trends, the Belgian families were joined by the Colombian family Santo Domingo. Through their investment firm Bevco, the Santo Domingos own a 15 percent stake in brewer SAB-Miller.
Who could have brought the Belgian and Colombian families to the table? Most likely Peter Harf, who is Chairman and Chief Executive Officer of Joh. A. Benckiser. Mr Harf served as Chairman of first InBev, then AB-InBev, from 2006 until 2012.
Incidentally, Mr Harf is also Deputy Chairman of the Board of Reckitt Benckiser, where SABMiller's CEO Graham Mackay was appointed a Non-Executive Director in 2005.
The magazine Trends commented: "There has long been speculation about a takeover or merger between AB-InBev and SABMiller. Through the coffee-acquisition it has become publicly known how well the families know each other."
Well, even without this deal, the families would have known each other. Consider it a given that everybody on the Forbes' List of richest people is pals with everybody else on it. Last year, when JAB through its unit Coty tried to take over cosmetics company Avon for USD 10 billion, they managed to get Warren Buffett on board.
Apart from the fact that billionaire investors seem to form an intimate network, what is really interesting about this coffee acquisition is that the families behind AB-InBev and SABMiller would rather take their dividends from the brewers to diversify their financial portfolios to include other industries than put all their eggs into one basket and up their existing stakes in the brewers.
Incidentally, the beer and coffee connection in DE Master Blenders does not end here. DE Master Blenders, which was spun off last year from consumer goods company Sara Lee Corp, chose as its first CEO a Heineken veteran: Michael Herkemij, previously head of Heineken in Mexico.
Alas, his reign did not last for long. He quit in December just six months after DE Master Blenders' stock market debut and was replaced by Jan Bennink.
DE Master Blenders has had a bit of a rocky start. Within weeks of its listing on the Amsterdam stock exchange, it shocked investors with news that its Brazilian business had been hit by fraud, tax and inventory issues, forcing it to restate past financial statements. And in February this year, the firm reported lower-than-expected profit and cut its outlook for 2013, citing pricing pressures in Europe.
DE Master Blenders, which also owns Senseo coffee and Pickwick Tea, had sales of USD 3.48 billion last year, which made it a distant third to number one coffee company Nestlé, selling USD 17.12 billion worth of coffee and number two Mondelez International (Jacobs coffee), selling USD 8.32 billion, according to Euromonitor International.
