Masterblenders says JAB makes $9.7bn mega buyout bid

Dutch tea and coffee producer D.E Masterblenders said Thursday it was considering a mega takeover bid by a German investor group lead by Joh. A. Benckiser that values the company at 7.6 billion euros ($9.7 billion).

Masterblenders said it had been "approached by Joh A. Benckiser (JAB) regarding a potential public offer for all the company's issued and outstanding ordinary shares."

"The price per ordinary share currently indicated by JAB is 12.75 euros on a fully diluted basis," a statement added.

Masterblenders, which was sold by US-based Sara Lee last year "agreed to allow JAB and its advisors to conduct due diligence," but the Dutch group emphasised that the negotiations were still at an early stage.

"At this time, it is uncertain whether negotiations with JAB will result in a conditional agreement on a potential full public offer...and if so, at what price and under what conditions," Masterblenders said.

It was "carefully evaluating" JAB's non-binding proposal, the Dutch group added.

Investors hailed the announcement and Masterblenders' share price leapt by 27.16 percent to 12.2 euros in morning trade on the Amsterdam stock exchange, while the AEX index of leading shares was 0.80 percent higher overall.

The deal to rival other European beverage producers such as Nestle "stood a good chance to succeed," ING analyst Marco Gulpers told Dow Jones Newswires.

JAB comprises a privately-owned affiliated group of companies and also owns a majority stake in cosmetics company Coty and a minority holding in the health and hygiene company Reckitt Benckiser.

JAB also owns Labelux, a luxury leather goods company with well-known brands such as Jimmy Choo, Bally and Belstaff.

It ventured into the tea and coffee sector last year when it bought the US-based Peet's Coffee & Tea and Caribou Coffee companies.

"Benckiser is clearly looking at the synergy effects between these three coffee houses. You have to see this as a strategic move," Theodoor Gilissen analyst Tom Muller told Dutch daily De Telegraaf.

"As the world's number two after Nestle, Masterblenders wanted improve its position by taking strategic marketing steps. This will now not be necessary (should the deal go through)," Muller added.

Masterblenders sells its products in more than 45 countries and employs 7,500 people worldwide.

It trades in brands such as Douwe Egberts coffee, Senseo and Pickwick tea.