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Italian coffee giant Lavazza is to buy the coffee arm of Mars, Mars Drinks, in a deal worth up to $650m.
The deal comes amid an acquisition spree in the global sector, with competitors JAB and Nestle active in recent months.
Lavazza has agreed to purchase the drinks supplier, which includes the Flavia and Klinx brands, two leading brands in the office coffee service and vending machine segments.
The value of the deal, expected to close in December, has not been revealed but sources close to the matter told Reuters it was likely to be worth around $650m.
The Mars coffee business stretches over North America, Germany, the UK, France, Canada and Japan, and helps Lavazza’s strategy of international consolidation.
It currently employs 900 people and turned over approximately $350m in 2017.
Lavazza, founded in 1895 by Luigi Lavazza in the northern Italian city of Turin, is the market leader in Italy and is privately owned by the founding family.
The move will grow Lavazza’s away-from-home proposition, the buyer said, as it looks to expand Mars Drinks.
Lavazza’s latest acquisition comes after French Carte Noire and ESP, Danish Merrild, Kicking Horse Coffee in Canada, NIMS in Italy and Australian Blue Pod Coffee.
Lavazza Group CEO Antonio Baravalle said: “This acquisition fits perfectly within our international expansion strategy, the objective of strengthening key markets, as well as the pursuit of having an even closer relationship with end consumers.
“Indeed, this acquisition strengthens the Lavazza Group’s position in the OCS [office coffee service] and vending segments, which offer considerable opportunities for growth and development
“Today’s transaction with Mars, Incorporated is consistent with a common vision and shared values between two prominent family-owned companies who have a strong focus on delivering quality products with uncompromising commitment to our employees and associates, with a long-term vision.”
Morning update
Like-for-like sales has jumped around 9% at ingredient supplier Treatt (TET) for the year, on the back of capital investment.
In a trading update for the year ended 30 September, the supplier said profits before tax are in line with expectations despite foreign exchange headwinds.
The company secured capital investment funding to drive growth both in the UK and US, and was benefitted by the disposal of “non-core business” Earthoil Plantations.
Treatt’s $14m US expansion is “progressing well”, as well as the relocation of its UK site.
Although like-for-like sales rose 9%, margins dropped due to “the combined impact of foreign exchange movements, fluctuations in raw material prices and some pricing pressure on new business”.
UK-listed Asian retail group Dairy Farm International has acquired the remaining 51% in Rose Pharmacy to complete 100% ownership.
The deal is conditional on approval by the Philippine Competition Commission and is expected to be completed in six months.
The group, which operates over 7,400 units across Asia including supermarkets, employs over 200,000 people, and had total sales in 2017 exceeding US$21 billion.
Elsewhere, Wall Street optimism has failed to move across the channel, with the FTSE 100 dropping 0.2% to 7,477pts in early trading.
This morning’s early risers include Vimto-maker Nichols (NICL), rocketing 5% to 1,491p, McBride (MCB), up 1.8% to 144.2p, and Majestic WINE (WINE), up 1.3% to 399.5p.
The early fallers include Unilever (ULVR), down 1.2% to 4,178p, Tesco (TSCO), down 1.1% to 234p, and Premier Foods (PFD), down 1% to 41.8p.
Yesterday in the city
The FTSE 100 tailed off in the afternoon to fall back 0.2% to 7,495pts, as trade tensions continue.
Yesterday, the UK and Irish arm of German discounter Aldi reported a growth in annual sales by 16.4% last year to £10.2bn and has pledged to open a further 130 stores over the next two years.
Yesterday’s big risers included transport food group SSP (SSPG), up 2.5% to 742.7p, MP Evans Group (MPE), up 2.2% to 705p and Greencore (GNC), up 2% to 188.7p.
Hotel Chocolat (HOTC) was one of yesterday’s big fallers, dropping back 5.1% to 322.5p, a week after posting a 13% hike in pre-tax profits and revealing ramped up expansion plans.
Other fallers included Carr’s Group (CARR), down 3.7% to 147.7p, Nichols (NICL), down 2.7% to 1,420p, and British American Tobacco (BATS), down 2.3% to 3,503p.
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