Masterblenders says in talks on mega buyout by JAB

Dutch tea and coffee producer D.E Masterblenders said Thursday it was negotiating a mega takeover bid by a German investor group, lead by Joh. A. Benckiser in a deal that would value Masterblenders 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 dilligence," 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 before 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.

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