The Swiss-based food company, Nestle, will pay the US coffee company, Starbucks, $7.15 billion to cement a global coffee alliance that would see Nestle marketing Starbuck’s products.
Following the new development, Starbucks said on Monday that proceeds will be used to accelerate share buybacks which will eventually lead to increased earnings per share by 2021. Nestle has also projected that the deal will add to its earnings by 2019.
Kevin Johnson, Chief Executive at Starbucks said he believes that the global alliance will bring the Starbucks experience to millions around the world with Nestle being a reputable brand.
Through the 2020 fiscal year, Starbucks is expected to return about $20 billion to shareholders in form of shares buyback and dividends. This step, it believes, will increase per-share earnings by the 2021 fiscal year.
In addition to the deal, Nestle will be taking up about 500 Starbucks employees.
Photo Credit: Identity Magazine
