Bloomberg News

JAB Boosts Holding in Master Blenders to More Than 15%

October 19, 2012

D.E Master Blenders 1753 NV (DE) rose to almost a three-month high after Joh. A. Benckiser, the investment firm run by Bart Becht, boosted its stake in the maker of Senseo coffee to 15.05 percent.

Master Blenders gained as much as 3.1 percent to 10.05 euros, the highest intraday price since July 24. JAB “confirmed the long-term nature of its investment in D.E Master Blenders 1753 to the company and underlined its belief in the company’s growth strategy and its significant potential in the coffee and tea categories,” Amsterdam-based Master Blenders said in a statement released late yesterday after Bloomberg reported the increased stake.

JAB has said the investment is financial, said Michiel Quarles van Ufford, a spokesman for Master Blenders. JAB’s Donata Holdings SE unit previously owned 12.2 percent of the coffee company. Sara Lee Corp. spun off Master Blenders in June. Shortly afterward, the JAB unit bought the stake and indicated that its holding might increase, though it planned to remain a minority investor.

“There is a possibility they will acquire the whole business at some stage,” said Richard Withagen, an analyst at SNS Securities in Amsterdam who recommends investors reduce their Master Blenders stake. “They are interested in these kinds of companies.”

Market Value

Master Blenders was trading up 2.2 percent at 9.99 euros as of 9:35 a.m. in Amsterdam, bringing its market value to 5.95 billion euros ($7.8 billion) and valuing JAB’s increased stake at about 892 million euros.

JAB bolstered its coffee holdings this year by agreeing to buy Peet’s Coffee & Tea Inc. (PEET:US) for about $1 billion. JAB subsidiary Coty Inc. unsuccessfully attempted a takeover this year of door-to-door cosmetics seller Avon Products Inc. (AVP:US) for more than $10 billion. Becht, also chairman of Coty, said then that the perfume maker would pursue other opportunities in light of Avon’s rejection.

“Conspiracy theory could suggest that in the medium-term future the Benckiser family is interested to play an active role in consolidation in the coffee market,” Marco Gulpers, an analyst at ING Groep NV, wrote in a note to investors today.

Master Blenders shares have gained 20 percent since their listing in Amsterdam, and have rebounded from an August dive after the coffee and tea maker said it would restate earnings because of accounting irregularities in Brazil. The company aims to unseat Kraft Foods Inc. (KRFT:US) as the world’s No. 2 coffee maker, and is relying on innovations like a ground-bean single-serve machine to boost sales.

“The strategy is very good,” said Withagen, “It’s all up to the management’s execution.”

To contact the reporters on this story: David Welch in New York at dwelch12@bloomberg.net; Celeste Perri in Amsterdam at cperri@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net; Jeffrey McCracken at jmccracken3@bloomberg.net


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