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JDE Peet’s Will Accelerate $2.6 Billion Amsterdam IPO

JDE Peet’s Will Accelerate $2.6 Billion Amsterdam IPO

(Bloomberg) -- Coffee giant JDE Peet’s BV is wrapping up its initial public offering in 10 days flat, as opposed to the customary four weeks, capturing investor appetite quickly to shield itself from market volatility amid the coronavirus pandemic.

The company, which is being listed in Amsterdam by JAB Holdings NV, will stop taking investor orders for shares by 4 p.m. Amsterdam time Thursday, it said in a statement, confirming an earlier Bloomberg News report. JDE Peet’s will price the 2.4 billion-euro ($2.6 billion) sale on Friday with trading set to begin on the same day. The company announced its intention to float on May 19 and started the offering on Tuesday, with an initial plan for trading to begin a week later, on Wednesday, June 3.

The offering is one of the fastest processes for a listing of its size. The few IPO candidates that have tapped European markets in recent weeks have shied away from the conventional listing timeline to minimize the risk that the offering would get caught up in market volatility brought on by the pandemic.

More marketing was done ahead of launch to limit exposure to market swings, a person familiar with the transaction said. JDE Peet’s gathered enough investor demand for its offering within three hours of opening the order book.

“Volatility is part of the reason, but there’s a lot of cash in the market to fund equity offerings, making shorter bookbuilds more feasible,” said Colin McLean, chief investment officer at SVM Asset Management, whose fund is likely to subscribe to the IPO. “It’s not about how long the book is open, but the level of, and access to, information and by that count JDE Peet’s has fared well,” he said.

There is a lot of competition among investors as well to get a place on offerings, he said.

An IPO is a lengthy process, including months of preparation with the actual listing typically taking as long as four weeks in Europe. Companies traditionally spend two weeks meeting intensely with investors before setting a price range, and then take orders for another two weeks. JDE Peet’s has compressed that entire timeline into 10 days.

Orders below 31.50 euros risk missing out on the deal, according to deal terms seen by Bloomberg. The shares were marketed at 30 euros to 32.35 euros apiece. At that price, the IPO proceeds would make it the largest listing on a European exchange since brake systems maker Knorr-Bremse AG’s 3.9 billion-euro offering in October 2018.

Among other firms that have shortened their bookbuilding periods, database management and analytics firm Exasol AG, which raised 87.5 million euros this week, closed its book for investor orders within three and half days. Norwegian video-conferencing firm Pexip Holding ASA, the first main market listing in western Europe since the pandemic upended global stock markets three months ago, kept its books open for a week.

Bankers are increasingly lining up key investors ahead of an IPO to minimize the time spent marketing shares to potential buyers. Cornerstone investors, including funds run by billionaire George Soros’s firm, have committed to taking up a third of JDE Peet’s offering.

JDE Peet’s is selling 23.3 million shares, while shareholders Mondelez International Inc. and Acorn Holdings, a company owned by JAB and other investors, will offload as many as 25.8 million shares each.

Coffee Consolidation

JDE Peet’s plans to use the proceeds to repay debt and to challenge rivals such as Nestle SA and Starbucks Corp. through potential acquisitions.

JAB Chief Executive Officer Olivier Goudet left his position at confectioner Mars Inc. to join the investment firm in 2012, having pitched the idea of consolidating the fragmented coffee industry to Chairman Peter Harf and JAB’s founders, the Reimann family. Last year, Goudet resigned from his position as chairman of brewer Anheuser-Busch InBev NV to spend more time focusing on JAB, effectively taking the knowledge he’d acquired in building the world’s biggest brewer to the most aggressive buyer in the caffeine business.

JDE Peet’s was created in December 2019 through a merger of American coffee retailer Peet’s and Jacob Douwe Egberts, which itself was the result of the combination of Dutch label Douwe Egberts and Mondelez coffee business five years earlier. Douwe Egberts was briefly listed in Amsterdam in 2012 under the name D.E Master Blenders 1753, before being taken off the exchange in 2013 by JAB.

The revolving door between the beer and coffee empires has also influenced JAB’s business model. Like the brewer, it’s moving to tap the advantages of scale. By moving to pay suppliers as many as 300 days after purchasing their beans, it’s squeezing trading houses while leaving the company sitting on more cash. That frees up money to help with takeovers.

JAB is also invested in coffee through its Keurig Dr Pepper Inc. business. In 2016, the investment firm bought Keurig Green Mountain, a brewing systems and roasting company, for $13.9 billion. Two years later, it acquired Dr Pepper Snapple Group to help expand the distribution of Green Mountain products for $18.7 billion, and listed the combined giant on the New York Stock Exchange. Keurig Dr Pepper now has a market value of $37.9 billion and is majority-owned by JAB.

BNP Paribas SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are the global coordinators for the listing.

©2020 Bloomberg L.P.