Peet's Coffee Raises $2.5 Billion From IPO, Defying Pandemic
May 29 2020 - 3:43AM
Dow Jones News
By Ben Dummett
The European investment firm behind Peet's Coffee, Krispy Kreme
and Keurig Dr Pepper said it priced the initial public offering of
its coffee business at the upper part of its targeted price range,
valuing it at EUR15.6 billion ($17.3 billion) in one of the world's
biggest IPOs so far this year.
Backed by JAB Holding, JDE Peet's B.V. bet that the resilience
of coffee demand during economic downturns would attract investors
despite slumping IPO markets in Europe and the U.S. amid the
coronavirus pandemic.
The wager has paid off. JDE Peet's is selling around 71.4
million shares, or about 14% of the coffee and tea business, at
EUR31.50 a share for a total of EUR2.25 billion. This is toward the
high end of the range of EUR30 to EUR32.25 a share.
That makes it Europe's largest IPO and the second-largest
globally this year after Beijing-Shanghai High-Speed Railway
Corp.'s $4.4 billion offering in early January, according to
Dealogic data. The pricing comes less than a week after bankers
officially launched marketing for the deal, underscoring the
strength of investor demand.
The stock started trading Friday on the Euronext Amsterdam,
jumping 11% at the outset to EUR35, underscoring investor appetite
for the offering
The IPO could offer some hope for other companies that can show
that the pandemic hasn't derailed their operations. Warner Music
Group is eyeing an offering that could value the music company at
between $11.7 billion and $13.3 billion, a bet that the music
industry will prosper even during times of market upheaval.
JDE Peet's sells coffee across the U.S., Europe and parts of
Asia through both cafes and grocery stores. They include Peet's
Coffee, Jacobs Coffee, Douwe Egberts, Senseo and Tassimo. About 80%
of its coffee is sold for at-home consumption, a market that has
held up so far during lockdowns.
The Netherlands-based company grew year-over-year revenue by 3%
in the first quarter ended March 31 to EUR1.68 billion. It expects
like-for-like sales, which exclude the impact of acquisitions, to
gain in the first half of 2020, according to its IPO filing.
JDE Peet's faces stiff competition from Nestlé SA, the world's
biggest coffee retailer in the at-home-use market. Last year,
Nestlé commanded almost 25% of the coffee market based on retail
sales, followed by JDE Peet's which has just over 10% of the
market, according to Euromonitor data.
At the same time, JDE Peet's smaller business as an operator of
a network of coffee shops represents a potential risk for IPO
investors depending on how quickly people are able to return to
their normal lives. The company said revenue from its out-of-home
business was down after it was forced to temporarily close its
retail stores due to the pandemic.
"Disruptions related to widespread public health concerns,
including the Covid-19 pandemic, could materially adversely impact
the group' business, financial condition or results of operations,"
the company warned in its prospectus.
JDE Peet's is selling about 22.2 million new shares as part of
the IPO for about EUR700 million. It will use that money to pay
down debt. The rest of the money raised will go to existing
shareholders, including Oreo cookies owner Mondelez International
Inc., for selling down their positions.
JAB Holding, which bought an additional EUR300 million worth of
stock in the IPO, remains the company's controlling
shareholder.
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
May 29, 2020 03:28 ET (07:28 GMT)
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