The initial public offering (IPO) market just got a shot of caffeine from JDE Peet’s BV. Do not expect other consumer listings to get such a rush.
The owner of Peet’s Coffee, Douwe Egberts, Kenco and Tassimo on Friday priced shares in its IPO at 31.50 euros, in the upper half of the offering range, valuing the company at 15.6 billion euros (US$17.3 billion), and rose to about 35.50 euros in mid-morning trading.
The biggest European IPO this year, pulled off in a swift 10 days, is a remarkable feat for a consumer business in the midst of a pandemic and a looming global recession.
Photo: Bloomberg
However, JDE Peet’s has been uncannily well-placed to capitalize on changing consumer habits during lockdown, the prospects for reopening and a resurgence in equity markets.
The Dutch company was floated by JAB Holding Co, the investment fund backed by Germany’s billionaire Reimann family. Cornerstone investors, including funds run by George Soros’ firm, had agreed to take up one-third of the offering, setting the tone.
In a world crowded with coffee chains, JDE Peet’s gets 80 percent of its sales from coffee that is drunk at home. That meant it benefited as corner cafes shuttered and people working from home were forced to become their own baristas.
Now that they can start going out again, it is ready to serve them their favorite hot beverage too at the Peet’s Coffee chain. Just as Nestle SA benefited from people looking to stock up on the Starbucks-branded coffee it sells in supermarkets, so JDE Peet’s might gain new customers at its cafes if they discovered its products in the grocery store during lockdown.
As consumers navigate post-lockdown life, JDE Peet’s looks well-insulated. That might explain why the valuation, as of mid-morning trading, approached that of Starbucks Corp on a calendar 2019 enterprise-value-to-EBITDA basis.
With consumers likely pulling in their purse strings, homemade coffee might be more popular than pricey takeaway lattes. Yet the valuation might also reflect optimism about reopening, and expectations that people will be eager to get out and about.
Early indications from US retailers, such as discount chain owner TJX Cos Inc and even department store Macy’s Inc, are that sales have been stronger than expected since Americans were able to shop in person once again.
Let us not forget about the IPO timing with stock markets gaining from their lows in March. That might be one reason why Peet’s was so keen on an accelerated book build: to avoid any sudden market turbulence.
The fortunate confluence of factors might not come together for other consumer-facing groups looking to float or spin off a division.
L Brands Inc’s desire to eventually separate its Victoria’s Secret lingerie chain comes to mind. It was grappling with a tired image and too many stores even before the COVID-19 pandemic.
As for Peet’s, the successful float leaves it with firepower for further acquisitions. It plans to use the proceeds to cut debt — it aims to reduce the leverage ratio from 3.6 times to below three times by the end of the first half of next year — but it gets an acquisition currency in the form of equity.
Competition for coffee assets has been intense. There was a flurry of deals two years ago with JAB’s US$2 billion purchase of Pret A Manger, which sells coffee as well as food to go; Coca-Cola Co’s US$5.1 billion swoop on Costa Coffee; and Nestle’s US$7 billion deal for the rights to sell Starbucks coffee in supermarkets.
However, JDE Peet’s could get lucky here, too, particularly in the market for drinking coffee outside the home. With the lockdown-induced distress in malls and on main streets, it might be able to grab something to go for a better price.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked for the Financial Times.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
Germany is to establish its first-ever national pavilion at Semicon Taiwan, which starts tomorrow in Taipei, as the country looks to raise its profile and deepen semiconductor ties with Taiwan as global chip demand accelerates. Martin Mayer, a semiconductor investment expert at Germany Trade & Invest (GTAI), Germany’s international economic promotion agency, said before leaving for Taiwan that the nation is a crucial partner in developing Germany’s semiconductor ecosystem. Germany’s debut at the international semiconductor exhibition in Taipei aims to “show presence” and signal its commitment to semiconductors, while building trust with Taiwanese companies, government and industry associations, he said. “The best outcome
Semiconductor equipment billings in Taiwan are expected to double this year, as manufacturers in the industry are keen to expand production to meet strong global demand for artificial intelligence applications, according to SEMI, which represents companies in the electronics manufacturing and design supply chain. Speaking at a news conference before the opening of Semicon Taiwan trade show tomorrow, SEMI director of industry research and statistics Clark Tseng (曾瑞榆) said semiconductor equipment billings in Taiwan are expected to grow by an annual 100 percent this year, beating an earlier estimate of 70 percent growth. He said that Taiwan received a boost from a
RSS