For centuries, the Dutch have relied on Douwe Egberts coffee for their morning jolt. Now they want the company to give the stock market the buzz it needs.
Renamed D.E Master Blenders 1753 NV, the company started initial trading in Amsterdam today following its split from Sara Lee Corp. (SLE:US) after more than three decades. Acting Prime Minister Mark Rutte joined the opening session for the maker of Senseo coffee and Pickwick tea.
Master Blenders marks the most high-profile return of a Dutch company from foreign ownership. A driving force of global expansion since the Dutch East India Company ruled the waves more than four centuries ago, it’s the Netherlands itself that has been plundered in recent years. More than 90 companies have been snapped up for more than $220 billion in a takeover wave ravaging a stock exchange that claims to be the world’s oldest.
“I do think, and I hope, that if it will be a success, that it will halt the extreme downfall of the stock exchange,” said Corne van Zeijl, a fund manager at SNS Asset Management in the city of Den Bosch. “This is not just any company getting a listing in Amsterdam. It’s a company with very strong Dutch roots, with Dutch management. So it’s more than welcome.”
The shares, trading on an “as-if-and-when-issued/ delivered” basis, opened at 8 euros in Amsterdam today and rose to 8.15 euros as of 11:10 a.m. That was below the technical reference price of 9.18 euros announced by NYSE Euronext. Settlement will take place from July 9, on which day the stock will gain an official listing. Sara Lee fell 3.3 percent to $19.47 yesterday, the steepest drop since Aug. 18.
Just over a decade ago, the Dutch played in the major league of global capitalism, as companies raided other nations for acquisitions. Unilever spent $24 billion buying Bestfoods in the U.S., insurer Aegon NV (AGN) bought Transamerica Corp. and Royal Ahold NV (AH), the owner of Stop & Shop supermarkets, spent $3.6 billion to acquire U.S. Foodservice.
Then fraud at that business crippled Ahold, wiping out more than half of the retailer’s market value in a single day and burning small shareholders attracted to the stock of a household name. That spurred an overhaul of corporate governance, including the elimination of policies that allowed boards to protect against takeovers.
Targets since have included ABN Amro Holding NV, the largest Dutch bank, in the world’s biggest financial-services takeover, and Royal Numico NV, led by Jan Bennink, who is returning as chairman for Master Blenders.
“It feels good to bring something back after taking a company away,” Bennink told reporters at the stock exchange.
Companies on the 25-member benchmark AEX-Index have shrunk, with 11 scoring a market value of less than 5 billion euros at yesterday’s close, almost twice as many as at the end of 2007.
“This company returning to its roots has a broader meaning for the Netherlands than its listing alone,” Anne Louise van Lynden van Sandenburg, head of listings of NYSE Euronext (NYX:US) Amsterdam, said of Master Blenders.
The renaissance of Master Blenders is a rare piece of good news for the nation of 16.7 million people, whose government collapsed in April and where unemployment is at the highest in six years. The Dutch soccer team lost its debut match in the European soccer championship to Denmark on June 9, a defeat for a nation awash with soccer-fueled patriotism.
“Douwe Egberts is as Dutch as complaining about the weather,” said Rutte, who became the first prime minister to attend a listing ceremony in Amsterdam.
Learning to Walk
Master Blenders has plastered Amsterdam with adverts featuring a single cup of coffee and the word “Home!” to herald its return and rightful place in Dutch kitchens.
Consumers have been collecting Douwe Egberts points from bags of coffee to save up for free storage tins or milk foamers. The company, led by former Heineken NV (HEIA) executive Michiel Herkemij, will start selling a new machine this year that uses whole beans and is aimed at the coffee aficionado.
“The stock definitely has potential to become a retail investors’ favorite,” said Holger Weeda, who manages 1 billion euros as head of Dutch Equity at BNP Paribas SA (BNP)’s Investment Partners unit in Amsterdam. “This is where it belongs.”
Rabobank Groep, Deutsche Bank AG and JPMorgan Chase & Co. acted as financial advisers on the spinoff. Goldman Sachs Group Inc. and Lazard Ltd. advised Sara Lee on the listing. ABN Amro Bank NV acted as listing agent.
Sara Lee is splitting in two as it unwinds its conglomerate structure. Becoming solely based on coffee and tea should allow Master Blenders to focus on investment and innovation at Senseo and its ground coffee business, which it failed to do under Sara Lee’s management, Bennink said in a 2011 interview.
“I would not say it’s healthy,” Bennink said of the company’s roast and ground coffee business. “No, it’s like a hospital patient starting to walk again. I know he can recover. He will run again.”
The company plans to invest heavily in marketing Senseo, the remaining half of which it bought back from Royal Philips Electronics NV this year, and expand into new regions. Domiciling the business in the Netherlands lets management be close to its main Western European markets, Bennink has said.
Under Sara Lee’s management, the company created a product to rival Nestle SA (NESN)’s Nespresso system, making pods that worked in Nespresso machines but cost less. Sales from those pods topped 50 million euros in the first six months of fiscal 2012, Master Blenders said in a June 1 filing, and it expects to extend its range in the future. Nespresso had sales of more than 3.5 billion Swiss francs ($3.7 billion) in 2011.
‘Why the Hell?’
Nespresso has done a “much better job” of innovating, Bennink said a year ago. Nespresso, marketed by George Clooney and sold exclusively in upscale boutiques and online, has posted double-digit sales growth for more than a decade. With Nespresso growing at that pace, “why the hell should I be satisfied” with less, Bennink said.
The Dutch listing also marks the return of Bennink, dubbed the “85 Million-Euro Man” by Dutch magazine FEM Business, based on his reported payout after Numico’s sale. Bennink himself said in an interview with local newspaper Het Financieele Dagblad that he would give the bulk of that money to charity and the rest to his children.
A grocer’s son from a remote part of the country, Bennink attracted both the nation’s wrath and respect after leading the sale of Numico to Danone SA (BN) in 2007 for 12.3 billion euros after he’d turned Numico around. After travelling the world for three years after the sale, he may need adjusting to his home country.
“I don’t enjoy my country that much,” he said a year ago. “There are lots of things I like and things I don’t. I’m only proud of the football team.”
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