We were awakened to the news this morning that the Luxembourg-based investment firm will be acquiring the weirdly named high-end breakfast cafe, Pret A Manger, from Bridgepoint Capital for $2 billion.
British sandwich and coffee shop chain Pret A Manger was sold for $2 billion (1.5 billion pounds) on Tuesday to an investment fund of Germany’s billionaire Reimann family, as part of a global acquisition spree aimed at challenging Nestle (NESN.S) in the coffee sector.
This is JAB's latest move in a long series of investments that are aimed at conquering the breakfast market in Europe and North America.
JAB Holding's has been in the breakfast game for many moons, but its power grab began when they acquired Keurig Green Mountain in late 2015. Keurig, the coffee, and small plastic waste producer were sold at the time for $21 billion to JAB Holding's to challenge the Swiss-based Nestle Co. What many don't realize is that JAB is run by the well-know Reinmann family, who happen to be Germans. Although the Swiss neighbors in the South share the same language, they aren't sharing feelings about cappuccinos.
Sorry for that tangent, let's continue.
In May 2016, Krispy Kreme became the next company that JAB acquired as they targeted the police officer market by establishing a stake in both coffee and donuts.
The breakfast battle intensified on May 7th when Nestle made the move to engage in a cash only, $7.15 billion licensing agreement deal to jump-start their coffee sales. The agreement allowed Nestle to peddle Starbuck's products all over the world and more specifically, in the United States.
The agreement will strengthen Nestle's position in the United States, where it is only the No. 5 player with less than 5 percent of the market. Market leader Starbucks itself only has a 14 percent share, according to Euromonitor International.
Nestle does run the risk of taking on some of the Starbuck's baggage, but Starbucks has been taking steps to remedy their public relations woes. Most notably, by closing all the stores today for tolerance education. I realized they were closing all of their stores today after I walked 10 minutes out of the way to get a frappucino this morning, but was met with the news that Starbuck's was educating their employees on social tolerance while simultaneously breaking down my caffeine tolerance.
Regardless, this is a strong retaliatory move from JAB to establish a stronger foothold in the U.S. coffee market, and it'll be interesting to see which move Nestle or JAB makes next in the ongoing battle to become king of caffeine.
Secret Intern Diary: Hope all of you guys enjoyed your Memorial Day Weekend, especially our veterans, service members, and families of service members. I, being a southerner, had not had the pleasure of experiencing Pret A Manger until I came to intern in New York City, and although I must admit that it's quite scrumptious y'all really need to step up your biscuit game. Lastly, please continue to send in anything intern related to Thad@dealbreaker.com. We've got some great stuff in the works and once the internships begin in the coming weeks we'll have all the best tales from the Boardy Barn, all the way to Bank of America.