Two coffee empires are joining forces, it was announced today. Swiss-based food giant Nestle S.A. is paying Seattle-based coffee giant Starbucks $7.15 billion for the rights to sell the chain’s Starbucks, Seattle’s Best Coffee, Starbucks Reserve, Teavana, Starbucks VIA and Torrefazione Italia around the globe.
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The Nestle brand already has a significant presence in the coffee business with well-known brands like Nescafe and Nespresso. The addition of Starbucks to Nestle’s coffee product portfolio means a java-like jolt for all three brands. The alliance marries Starbucks’ U.S. coffee dominance and Nestle’s 152-year history and global reach. This means citizens around the world will soon sip on Starbucks’ products.
Starbucks fans need not worry: The company’s new influx of cash won’t change the price of your morning venti skinny vanilla latte. The agreement only covers Starbucks’ packaged goods sold outside of U.S. cafes, and it doesn’t include Starbucks’ ready-to-drink coffee, tea or juices. “This is a great day for coffee lovers around the world,” Nestle CEO Mark Schneider said in a press release.
Proceeds of the transaction signal a windfall for shareholders. Starbucks said it would use the earning to return approximately $20 billion in cash to shareholders by a share buyback and dividends program.
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