Financing. The intended Offer values 100% of D.E. MASTER BLENDERS (PINK:DEMBF) (AMS:DE) shares at c€7.5bn (on a fully diluted basis) or €7.9bn including debt. JAB announced it has secured €3bn of debt from banks implying an equity financing need of €4.9bn (including the 15% JAB already owns in DEMB). The company has received equity commitment letters from a four financial investors: JAB, BDT Capital Partners (who also acquired a minority stake in along with JAB in Peet’s Coffee and Caribou), Société Familiale d'Investissements (vehicle linked to the Belgian founding families of ABI), and Quadrant Capital Advisors (vehicle linked to Julio Mario Santo Domingo, #2 largest SAB Miller shareholder).
Offer conditions. The offer is subject to a 95% acceptance level (which can be waived down by the offerors), anti-trust clearance (likely given the financial nature of the buyers), completion of works council consultation as well as other pre-offer and offer conditions. Despite the high acceptance level, management feels confident that the transaction will close. Approval of certain resolutions will be sought during an EGM that should take place in the first weeks of July.
Next steps. The Offer Memorandum is expected to be filed with the AFM within the next 4 weeks according to the company while closure of the transaction is envisaged for the second half of July. Works council consultations will start immediately though the company does not expect any big issues.
On the conference call, Jan Bennink - D E Master Blenders 1753 NV - Interim CEO stated:
We're here to announce the recommended cash offer for DEMB for Joh A Benckiser led investor group. D.E. MASTER BLENDERS (PINK:DEMBF) (AMS:DE)'s Board has carefully reviewed JAB's offer and based on this evaluation the offer has received the full support and unanimous recommendation of the Board.
As a Board we agree the new ownership structure will support the successful execution of our growth strategy that will create one of the world's leading coffee and tea companies. It will also provide additional opportunities to expand the product portfolio, strengthen competitive positions and create new opportunities for the people of D.E. MASTER BLENDERS (PINK:DEMBF) (AMS:DE). Last but not least the intended transaction does not pose any significant deal hurdles, as there are no integration issues. So, in other words, there's a high level of deal certainty.
Although DEMB's ownership structure will change, our leading and iconic brands, products and market positions will remain. Acknowledging the strength and importance of the Dutch home market, JAB has pledged to maintain and further invest in the centralized R&D center and the two factories that are located in the Netherlands. JAB has also confirmed that DEMB's head office will remain in Amsterdam.
The next steps in this process involve among others, the formal bid by the JAB led investor group, including the publication of the Offer Memorandum, consultation of D.E. MASTER BLENDERS (PINK:DEMBF) (AMS:DE)'s workers' council, obtaining the customary regulatory approvals as well as an extraordinary general meeting for shareholders that is expected to take place in the first half of July, when this intended transaction will be discussed with our existing shareholders. We anticipate that the intended offer will close sometime in the second half of July 2013.
About two years ago we set out to create a pure play coffee and tea company spinning off from Sara Lee with an ambitious strategy for growth. Today's announcement is yet another milestone in the 260 year history of Master Blenders. It confirms the value of what has been achieved thus far and the high potential of the platform we have built for the future. The intended offer is testimony to the strength of D.E. MASTER BLENDERS (PINK:DEMBF) (AMS:DE)'s brands, their leading market positions and the promising strategy and innovation pipeline the Company has developed. And of course, importantly, it is a great complement to all the employees that have contributed to the Company's success.