Nestle to pay $7.15 billion to Starbucks in global marketing deal

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Nestle rose 0.6 per cent after news it will pay $7.15 billion as part of a global coffee alliance in which the food group is getting the rights to market Starbucks products around the world outside United States coffee company's shops.

The agreement only covers Starbucks' packaged goods sold outside the USA company's stores.

Starbucks CEO Kevin Johnson said the deal "will bring the Starbucks experience to the homes of millions more around the world". It doesn't include Starbucks' ready-to-drink coffee, tea or juices.

Nestlé SA said Monday it has entered an agreement with Starbucks sell the coffee chain's consumer and food service products.

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Mr Schneider described the "global coffee alliance" with Starbucks as "a great day for coffee lovers around the world".

Starbucks says it will "retain a significant stake as licensor and supplier of roast and ground and other products going forward".

It said the transaction was expected to add to earnings per share by the end of fiscal year 2021 or sooner, with no change to the company's now stated long-term financial targets. Around 500 Starbucks employees will join Nestle as part of the deal, which is expected to close by the end of 2018.

Nestle will make an upfront cash payment of 7.15 billion dollars to Starbucks in closing consideration for a business that generates 2 billion dollars annual sales.