Keurig to buy back more than half of Lavazza’s stake in company

Italian coffee maker has been raising cash to fund its acquisition of L’Or and Grand Mere

Keurig Green Mountain Inc, the maker of the K-Cup single-serve coffee pod, will buy back more than half of Italian coffee maker Luigi Lavazza SpA's stake in the company for about $624 million.

Lavazza has been raising cash to fund its acquisition of French coffee brands L’Or and Grand Mere.

The company has bid more than €600 million for the brands, which are on the block as part of a merger of Mondelez International Inc's coffee business with Dutch rival DE Master Blenders 1753.

Lavazza, the world’s seventh-largest coffee maker, will slash its stake in Keurig to 2.9 per cent from 6.1 per cent, Keurig said in a statement on Monday.


The Italian coffee maker first bought a 7 per cent stake in Keurig in August 2010 for $250 million. Keurig’s stock traded at about $30 at the time and has nearly quadrupled since then through Friday’s closing.

Lavazza raised €44 million last month by selling 0.23 percent of its stake in Keurig.

L'Or, whose coffee pods unit is seen as the most valuable part of its business, is the fifth-largest maker of single-serve coffee pods in Western Europe, with a 4.4 per cent share of the market, according to Euromonitor.

Keurig said on Monday it would buy back about 5.2 million shares for $119.18 each - a 3 per cent discount to the stock’s Friday close.

The agreement also eliminates Lavazza’s pre-emptive rights on future issuances of Keurig’s shares.

Keurig’s shares were up about 1 per cent at $124 on Monday on the Nasdaq. – Reuters