Peet's Coffee Raises $2.5 Billion in Stock Offer -- WSJ
By Ben Dummett
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 30, 2020).
The European owner of Peet's Coffee saw its shares jump almost
14% in their trading debut Friday, marking one of the world's
biggest initial public offerings so far this year in a deal that
valued the coffee business at EUR15.6 billion ($17.3 billion).
Backed by investment firm JAB Holding Co., JDE Peet's BV's
shares closed at EUR35.84 Friday following its listing on the
Euronext Amsterdam stock exchange. The IPO was priced at EUR31.50 a
share, toward the high end of the target range.
Other JAB businesses include Krispy Kreme and Keurig Dr
JDE Peet's, which also counts Douwe Egberts, Jacobs, Senseo and
Tassimo among its coffee brands, 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
The wager paid off. JDE Peet's is selling around 71.4 million
shares, or about 14% of the coffee and tea business for a total of
EUR2.25 billion. That makes it Europe's largest IPO and the
second-biggest globally this year after Beijing-Shanghai High-Speed
Railway Corp.'s $4.4 billion offering in early January, according
to Dealogic data. The pricing came less than a week after bankers
officially launched marketing for the deal, underscoring the
strength of investor demand.
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
$11.7 billion to $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. About 80% of its coffee
is sold for at-home consumption, a market that has held up so far
The Netherlands-based company reported first-quarter revenue of
EUR1.68 billion, up 3% from a year earlier. It expects a rise in
comparable sales, which exclude the impact of acquisitions, for
2020's first half, 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 retail
stores due to the pandemic.
"Disruptions related to widespread public-health concerns,
including the Covid-19 pandemic, could materially adversely impact
the group's 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 remainder 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
Write to Ben Dummett at firstname.lastname@example.org
(END) Dow Jones Newswires
May 30, 2020 02:47 ET (06:47 GMT)
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