Starbucks and Nestle join forces

Starbucks and Nestle join forces

Nestle added that it will pay the $7.15 billion upfront in cash for the rights to sell Starbucks coffee products in supermarkets, restaurants and catering operations.

In a statement, the CEO of Nestle Mr. Mark Schneider said that Nespresso, Nescafe and Starbucks are 3 iconic brands in the world of coffee.

Nestle will also sell other brands owned by Starbucks, such as Seattle's Best Coffee, Teavana tea and Torrefazione Italia coffee, and will be allowed to put the Starbucks brand on Nestle single-serve capsules for coffee machines.

It doesn't affect any of the products sold in coffee shops, but means Nestlé will sell Starbucks-branded pods for their Nespresso machines, as well as coffee in bags.

The partnership is subject to approval from regulators.

The deal will not involve any of the Seattle-based company's cafes and Nestle expects the deal to begin adding to earnings by 2019.

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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. The transaction doesn't include any fixed assets and excludes Starbucks' ready-to-drink products.

The first Italian Starbucks will be situated in the historic post-office building overlooking Piazza Cordusio in central Milan, a stone's throw from the Duomo, and will be one of the company's more high-end establishments.

In January, Nestle sold its US confectionery business to Ferrero.

Nestle's ongoing share-buyback program will remain unchanged.

That's the threshold USA oil prices crashed through Monday for the first time since late 2014, foreshadowing costlier gasoline and consumer goods.

Starbucks in November agreed to sell tea brand Tazo to Unilever for $384 million. Higher sales at the operating segment were primarily driven by increased sales through the worldwide channels and sales of packaged coffee, foodservice and single-serve products. We are delighted to have Starbucks as our partner.

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