Nestle (NSRGY), a food giant based out of Switzerland, paid $7.5B in cash for the rights to market Starbucks (SBUX) products globally outside of the company’s coffee shops. The deal gives the Nescafe a more capable platform to continue growing in North America. Nestle, who has already bought a stake in Blue Bottle Coffee, plans to focus on coffee for a main area of growth.
Starbucks produces around $2B in annual sales. Nestle will be selling the coffee shops coffee beans and ground coffee in supermarkets and groceries across the globe. The agreement, does not include any of the Starbucks coffee shops and cafes.
The new deal should begin making positive contributions to Nestle’s earnings per share starting next year. On Starbucks’ side, the cash could possibly accelerate share buybacks. The transaction, which is still awaiting approval by regulators, is expected to be finalized by the end of 2018.
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Nestle pays $7.15 billion to sell Starbucks products
Swiss food giant Nestle announced Monday it will pay $7.15 billion in cash for the rights to market Starbucks products around the world, outside of the company’s coffee shops. The Starbucks business covered by the deal currently generates around $2 billion sales annually and includes coffee beans..