JDE Peet’s Notches $2.6B In IPO

After it notched €2.25 billion ($2.6 billion) in one the largest initial public offerings (IPOs) in Europe as of 2018, JDE Peet’s stock surged over 12 percent in its inaugural trading day. The listing serves as one of the largest IPOs after the COVID-19 health crisis impacted international economies and put a damper on new listings throughout the globe, the Financial Times reported.

“This is a company that doesn’t have a direct comparison in Europe — it’s unique, very large, and very resilient,” BNP Paribas Head of Equity Capital Markets Andreas Bernstorff said in the report. “There is not much else out there that investors are looking at so people had time to engage with this.”

The firm sold 61.7 million new and current shares at €31.50, or $35.06, which comes out to a 14.4 percent portion in the purchase. An additional 9.2 million shares could be sold if bankers choose to use an overallotment option. The company has its roots in a grocery store created in 1753 in the Netherlands by Egbert Douwes.

The new proceeds of €700 million (roughly $779 million) will be utilized to decrease JDE Peet’s elevated debt levels and make its balance sheet more formidable. Shareholders, with the inclusion of Mondelez International, sold approximately €1.55 billion in current shares in the arrangement. JAB will still be the firm’s biggest shareholder after the offering via Acorn, a holding firm. 

JAB will have a 38 percent stake with its direct interest, while Mondelez will be the next-biggest shareholder at 23.4 percent. JDE Peet’s brands, for their part, include Peet’s Coffee, Douwe Egberts, and Kenco.

Bloomberg reported the offering is one of the fastest processes for a listing of its size. The few IPO candidates to seek European markets in the last month have rejected the conventional listing time of line of more than a month to minimize the risk brought on by the coronavirus pandemic.

“Volatility is part of the reason, but there’s a lot of cash in the market to fund equity offerings, making shorter bookbuilds more feasible,” Colin McLean, chief investment officer at SVM Asset Management told the news service. “It’s not about how long the book is open, but the level of, and access to, information and by that count JDE Peet’s has fared well.”

As previously noted, Peet’s reflects both the headwinds and tailwinds of current consumer spending. Approximately 80 percent of the annual sales is tied to spending at home via ground coffee, whole beans, and pods.

The remaining 20 percent originates from “out of home” channels in which consumers purchase coffee in hotels, restaurants, and stores. And the company operates approximately 250 coffee shops.