Are You Ready for Coffee Wars? Nestle Pays $7.15B to Sell Starbucks Coffee Worldwide

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Nestle and Starbucks are uniting to create the biggest empires. Keep on reading to know more.

Joining forces 

Swiss-based food giant Nestle will pay Starbucks $7.15 billion in cash for the rights to sell the U.S. chain’s products around the world in supermarkets, restaurants and catering operations, the companies said Monday. Nestle will use the Starbucks brand in its Nespresso and Dolce Gusto capsule systems next year.

Seattle-based Starbucks said it would use proceeds to speed up share buybacks and that the deal would add to earnings per share by 2021 at the latest.

Nestlé said it expected the deal to sell Starbucks bagged and drinks, adding to earnings by 2019. It will not involve any of Starbucks’ cafes.

Starbucks will continue to produce the products in North America, while Nestle will be in charge of manufacturing in the rest of the world.

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“This global alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestlé,” said Starbucks chief executive Kevin Johnson.

“Nestlé is far and away the largest hot drinks company globally, with more in sales than the next five largest hot drinks companies combined,” Matthew Barry, an analyst at Euromonitor said.

“However, Nestlé’s leadership position is less secure than it once was.”


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