FOODBEV NEWS: Nestlé to invest a billion dollars in Mexico

Nestlé is to invest a billion dollars in Mexico, building two new factories in the country, which is the sixth largest global market for the company.

The announcement was made by Nestlé CEO Paul Bulcke during the World Economic Forum in the Swiss resort of Davos.

The five-year investment will fund a new infant nutrition factory in Ocotlán, in western Mexico's Jalisco state, and a pet food factory in the city of Silao, in the central Mexican state of Guanajuato. It will also be used to expand Nestlé's cereal factory in Lagos de Moreno, also in Guanajuato state, with state-of-the-art technology, making it the company's largest in the region.

The investment would, he said, enable the creation of 700 direct and 3,500 indirect jobs, as well as bolstering the amount of raw materials purchased locally.

Source: Nestlé / Shaun Weston - Original Article: http://www.foodbev.com/news/nestl-to-invest-a-billion-dollars-in-mex#.UuKK_BAo7AU    24 Jan 2014

Nestle nears plan to cut underperforming brands

Oct 1 (Reuters) - Nestle hinted on Tuesday it was getting closer to disposing of bad brands and shaking up its portfolio to deal with businesses that have underperformed for too long.

The company's chief executive Paul Bulcke told investors Nestle had drawn up lists of businesses that could be fixed and those that could not.

"Divestitures, we're going to have some," Bulcke said. "We want to be inbusiness, not in agony."

"The shortlists are there and now the action has to come. The timelines have to be wise, but action will come," he told a presentation to investors, stressing that managing the portfolio was a top priority.

Without identifying specific brands, Bulcke said some had been "sailing under the radar screen for too long without being part of the party."

Suggesting the process is already under way, sources told Reuters last week that Nestle's PowerBar energy bars were up for sale.

Nestle's performance in recent quarters has lagged some peers, in part because of the company's mammoth size and multiple brands, from Gerber baby food to Perrier water to Nescafe coffee to name only a few. The company posted 92.2 billion Swiss francs in annual sales last year and has 203.81 billion Swiss francs ($225.16 billion) in market capitalization.

Bulcke said other priorities included structural efficiency and scaling back capital expenditure. Moving ahead, Nestle's capital expenditure should be around 4 percent to 5 percent of sales, he said, below 2012's 5.8 percent.

After consumer goods rival Unilever warned on Monday of a sharper slowdown in its emergingmarkets, Bulcke acknowledged that sales in the region were slower than before, but added that growth was more stable than before. A degree of slowdown was healthy, he said, given that the double-digit rates in some markets, like China, was unsustainable.

Bulcke declined to comment on Nestle's plans regarding its closely-watched 30 percent stake in L'Oreal beyond repeating that all options were on the table. Restrictions on selling the stake expire in April.

Nestle shares were down 0.6 percent at 62.85 euros at 1122 GMT.

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Caribou Coffee / Peet's Tea Owner (JOH Benckiser of the German Benckiser Family) Buys Master Blenders, Trying to Globally Compete with Nestle & Mondelez!

Caribou, Peet's owner to buy former Sara Lee coffee unit

(Original article posted by Reuters on ChicagoTribune.com and can be read here)

German investor Joh A Benckiser (JAB) is to buy the owner of Douwe Egberts coffee in a $9.8 billion deal to create a global hot drinks empire aimed at taking on market leaders Nestle and Mondelez.

D.E Master Blenders 1753, the Dutch owner of Douwe Egberts coffee and Pickwick tea, said on Friday it had reached conditional agreement on a 12.50 euros per share cash takeover offer from a group of investors led by JAB.

JAB, the investment vehicle of the billionaire Reimann family, has been building a hot drinks business in a bid to tap strong growth driven by new products, such as single-serve coffee brewers, and demand from emerging markets.

Its brands include Caribou Coffee Co Inc. and Peet's Coffee & Tea Inc. in the United States, while D.E Master Blenders will give it a strong position in Europe.

The offer is below JAB's original proposal of 12.75 euros per share, but still represents a 36 percent premium to D.E. Master Blenders' average closing share price in the three months to March 27, when the initial proposal was disclosed.

Analysts said the price compared favourably with recent similar deals and saw little chance of a rival bid, not least because JAB already owns around 15 percent of D.E Master Blenders, meaning it will actually pay about 6.4 billion euros.

"We consider the probability of a higher offer to be slim," said KBC Securities analysts Pascale Weber and Jan-Willem Billiet in a note, recommending investors accept the offer.

D.E Master Blenders declined to specify why the offer price had been reduced from the initial proposal and chief executive Jan Bennink, who will step down after the takeover, said it had not had contacts with other potential buyers.

D.E Master Blenders, which also owns Senseo coffee, has had a rocky time since it was spun off last year from Sara Lee Corp., which has since changed its name to Hillshire Brands.

Within weeks of its listing, it shocked investors with the news its Brazilian unit had been hit by fraud, tax and inventory problems, forcing it to restate past financial statements.

Previous CEO Michael Herkemij quit in December, just six months after the stock market debut, and in February the firm reported lower-than-expected profits and cut its outlook for 2013 citing pricing pressures in austerity-hit Europe.

Market leader Nestle's coffee sales had a retail value of $17.12 billion last year, while Mondelez International ranked second at $8.32 billion, according to Euromonitor International.

D.E Master Blenders ranks third with annual sales of about 2.66 billion euros.

JAB said it would finance the deal through a combination of roughly 3 billion euros of debt and about 4.9 billion euro in equity, and said it has committed financing from arrangers Bank of America, Citibank, Rabobank and Morgan Stanley. The deal is conditional on issues including regulatory approval.

Leonardo & Co., BDT & Company, Bank of America Merrill Lynch and Rabobank/Rothschild are financial advisers to JAB. Lazard is lead financial adviser to D.E Master Blenders, with Goldman Sachs and JP Morgan also acting as financial advisers.