The world’s largest coffee company, Nestle, is close to a deal with Starbucks for the part of its business that sells bagged coffee and drinks in supermarkets, according to media reports on Friday, May 4.
Any deal between the coffee giants would not involve any of the Seattle-based chain’s more than 28,000 cafes, according to Bloomberg.
The deal could net Starbucks US$3.8 billion after tax, according to Cowen analysts, based on Starbucks’ operating earnings excluding its K-Cups and the multiple recently paid for Keurig Green Mountain. They predicted Starbucks would use that to buy back shares.
Nestle and Starbucks both declined to comment.
Starbucks, which last week reported a global drop in quarterly traffic to its established cafes, has been revamping its business. It recently sold its Tazo tea brand to Unilever or US$384 million and closed underperforming Teavana retail stores.
Full Content: Bloomberg
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