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Nestle Makes $7.15 Billion Deal With Starbucks to Sell its Products
Nestle will buy the rights to sell products of Starbucks outside the US-based coffee chain's outlets for $7.15 billion in cash.
The Swiss food and drink company Nestle will buy the rights to sell products of Starbucks outside the US-based coffee chain's outlets for $7.15 billion in cash, reported Reuters.
Starbucks has said that its proceeds will go into speeding-up share buybacks. The deal is expected to add to the company's earnings per share (EPS) by 2021.
The earnings from selling Starbucks bagged drinks and coffee by Nestle is expected to start making revenue by 2019. The earnings will only include sales apart from Starbucks cafes.
The global alliance is anticipated to widened Starbucks sales with the help of Nestle's brand reputation and reach around the world.
Starbucks has proved its success among the younger crowd who are willing to pay for exotic coffee beans and customized drinks. With a wider reach, the deal could only increase the company's profits.
It expects to return as much as $20 billion to shareholders in cash through share buybacks and dividends in 2020.
As a part of the deal, Nestle will also get about 500 of employees from Starbucks.
