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Deal Nearing Between Nestle And Starbucks For Bagged Coffee Business Of The Later

Deal Nearing Between Nestle And Starbucks For Bagged Coffee Business Of The Later
The business of Starbucks Corp that is engage in selling of bagged coffee and drinks in supermarkets is being sought to be bought over by Nestle, the largest coffee company in the world. sources and reports have said that the two companies are close to striking a deal soon. 
The news was first reported by Swiss financial blog Inside Paradeplatz and was followed up by Bloomberg which stated that none of the more than 28,000 cafes belonging to the Seattle-based chain coffee shop chain would be included or be part of any deal that could possibly be truck between the two coffee giants.
According to Cowen analysts, Starbucks could be valued at $3.8 billion in net value and that bvalue is based on the operating income of the company but excluding its K-Cups and the multiple that was recently paid for Keurig Green Mountain. The money that was thus collected could be used by Starbucks to buy back shares, they predict.
According to media reports, announcement of the deal could come as early as next Monday.
No comments were available from either Nestle or Starbucks.
Starbucks is in the process of revamping its business globally. There has been a fall in traffic at the established cafes globally of Starbucks, reported the coffee chain last week. In recent times, Unilever has bought over the Tazo team brand of the company in a deal that is worth $384 million. The chain has also closed down the loss-making division of Teavana retail stores.
Earlier, the packaged coffee business was licensed by Starbucks to Kraft Foods. However, the agreement was brought to an end by the company in 2011 and then handed over the business to Acosta Inc which is a privately held company.
Starbucks had bene forced to pay Kraft a $2.76 billion ibn compensation by an arbitrator because the café chain had wanted to institute an early exit from the agreement of partnership that it had with Kart which was slated to continue till the end of 2014. At the time of the payment of the compensation, Haaft had bene split into two companies.  Mondelez International got the compensation amount.
There are also a number of licensing agreement between the largest packaged food company in the world – Nestle and a number of other companies. While Hershey has an agreement with the company for selling Nestle’s KitKat brand in the United States, Nestle has a partnership agreement with General Mills for selling products of the later’s  Haagen-Dazs brand in the United States.

Christopher J. Mitchell

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