What’s Going On Here?JDE Peet’s brightened up investors’ mornings with a charming novelty for these pandemic-fatigued times: a fast-tracked $2.9 billion initial public offering (IPO). What Does This Mean?Shares in JDE – the world’s second-biggest maker of packaged coffee, and owner of brands like Douwe Egberts, Peet’s Coffee, and Jacobs – are set to wake up bright and early on Friday to start trading on the Amsterdam Stock Exchange. The company’s raising $2.9 billion in an IPO that values the company at more than $17 billion – a number that's caught the attention of big-name buyers like George Soros (tweet this).
Coronavirus-related travel restrictions mean JDE had to hold an all-virtual roadshow, just like videoconferencing company Pexip did a few weeks ago. But that’s helped speed this whole process up: JDE is wrapping up its IPO in ten days rather than the usual four weeks, making it one of the fastest IPOs of its size. Probably a wise move, given that no one knows when the next bout of coronavirus-induced market volatility is going to hit… Why Should I Care?For markets: A good cup of Joe.
JDE plans to use the proceeds from the IPO to outbrew its main coffee rivals: Starbucks, Nestlé, and Green Mountain Coffee. One way it plans to do that is by buying up smaller rivals, which will be a lot more straightforward thanks to the tough terms it’s negotiated with its suppliers. JDE pays them up to 300 days after it buys their coffee beans, freeing up plenty of cash for those tasty, tasty takeovers.
The bigger picture: No ‘bucks given.
With so many coffee shops shut due to coronavirus restrictions, coffee-drinkers are increasingly getting their caffeine fix at home. That gives JDE the edge over Starbucks, which – despite recruiting Nestlé to sell its coffee in grocery stores – still makes most of its revenue from physical coffee shops. JDE, on the other hand, makes almost 80% of its revenue from grocery sales. | 