Nestle to Pay $7.15 Billion to Starbucks to Jump-Start Coffee Business

(From Reuters)

Swiss-based food giant Nestle will pay Starbucks $7.15 billion in cash for the rights to sell the U.S. coffee chain’s products around the world in a global alliance aimed at reinvigorating their coffee empires.

The deal on Monday for a business with $2 billion in sales reinforces Nestle’s position as the world’s biggest coffee company tries to fortify its place atop a fast-changing market.

Bernstein analyst Andrew Wood said that Nestle’s third-biggest acquisition would allow the Swiss company to expand the brand through its global distribution network.

Nestle said it expects the deal to sell Starbucks bagged coffee and drinks adding to earnings by 2019. It will not involve any of Starbucks’ cafes, but does let Nestle sell Starbucks coffee in individual pods and expand sales of soluble coffee.

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