Coffee IPO Set to Be Europe’s Biggest Since March 2019
Coffee IPO Set to Be Europe’s Biggest Since March 2019
(Bloomberg) -- JAB Holdings NV, the investment fund backed by the billionaire Reimann family, plans to raise as much as 2 billion euros ($2.2 billion) by listing its coffee business, showing that the resilience of the beverage during the coronavirus pandemic could end up driving Europe’s biggest stock-market debut in more than a year.
About 700 million euros will come from an initial public offering of JDE Peet’s in Amsterdam, and the rest from shareholders reducing their stakes, according to a statement Tuesday. While the company didn’t specify the total size, it could reach 2 billion euros, people familiar with the matter said, which would make it the biggest IPO on a European exchange since payments company Nexi SpA’s 2.1 billion-euro sale in March 2019.
JDE Peet’s will gain a stock to use as currency for further acquisitions to challenge Nestle SA and Starbucks Corp. in the industry. JAB has spent billions of dollars to build a java empire through deals that included the merger of Jacobs Douwe Egberts Group with U.S. coffee retailer Peet’s, and its brands also include Senseo, Tassimo, Stumptown and Intelligentsia.
“There are lots of competitors, and a lot of coffee and tea companies we continue to look at,” JDE Peet’s Chief Executive Officer Casey Keller told reporters on a call Tuesday. “We see opportunities in the future; it’s still a relatively fragmented marketplace.”
Only a few have braved rocky markets gripped by the pandemic with an IPO. Share sales have been reserved for companies that have survived or even thrived during lockdowns. Last week, video-conferencing company Pexip Holding AS was the first in western Europe to list on a main exchange in almost two months. The stock has surged as much as 66% since then as demand for remote-working software exploded.
The announcement by Luxembourg-based JAB is a bet that the worst of the stock market’s coronavirus-driven turmoil is over. JDE Peet’s business has been “relatively resilient” during the crisis, the company said, and its medium- to long-term targets continue to be achievable. It said the offering will take place in the coming weeks, subject to market conditions.
JAB is the investment vehicle for the Reimanns, heirs to a fortune from an industrial chemicals business and one of Germany’s wealthiest families. Its other holdings include fast-food brands ranging from Krispy Kreme Doughnuts to the Pret A Manger sandwich chain.
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.
JAB even teamed up with Illycaffe SpA to sell branded coffee capsules that work in Nestle’s Nespresso machines. Coffee leader Nestle has made some bold steps of its own, investing in hipster brands like Blue Bottle Coffee, a niche U.S. player that’s popular with millennials. It also introduced a big-cup machine for the U.S. market and splurged on a partnership with Starbucks.
Green Shoot
The sale of JDE Peet’s could be worth more than the total IPO proceeds of $1.7 billion across 23 listings this year, according to data compiled by Bloomberg. The offering is an earlier-than-anticipated green shoot in the IPO market, which was expected to remain virtually shut for several months at least due to the social-distancing measures imposed in response to the virus outbreak.
BNP Paribas SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are the global coordinators on the listing.
JAB decided to press ahead with the sale in part because shares of Nestle have held up well during the pandemic, according to a person familiar with the matter. The Swiss company’s stock is up 0.3% this year versus a 16% decline for an index of European food and beverage companies.
The offering will take place more quickly than the usual four-week timeline, the person said. The first firms to list in Europe since the coronavirus sent the region into lockdown have resorted to shorter subscription periods to minimize market risk and used video-conferencing in marketing their share sales to investors.
©2020 Bloomberg L.P.