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Nestlé Pays $7.2B to Sell Starbucks Coffee

Both companies stand to benefit from the alliance

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Consumer products company Nestlé S.A. (Vevey, Switzerland) has reached a deal with Starbucks Coffee Co. (Seattle) for $7.15 billion cash to begin selling the brand’s packaged coffees and teas worldwide.

The deal offers benefits to both companies: Starbucks coffees and teas serve as premium products that Nestlé can distribute on a vast worldwide scale. Starbucks stands to boost its packaged goods business by $2 billion through international retail sales, and Nestlé expects the deal to add to its earnings by 2019.

According to Reuters, Starbucks will use the proceeds to increase planned stock buybacks to $20 billion from $15 billion by 2020, with added earnings per share by 2021. The coffee company will also receive revenue from product sales and royalties.

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