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JAB extends coffee spree with $1bn offer for Super

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Dutch coffee group Jacobs Douwe Egberts made a $1bn takeover offer to the Singaporean instant coffee producer Super Group.

The deal marks the first foray by JAB Holdings, the majority owner of Douwe Egberts, into the booming Asian market, after a slew of other coffee acquisitions.

Super is Asia's second-largest instant-coffee company, after the global giant Nestle.

Shareholder support

Douwe Egberts made an all-cash offer of S$1.30 a share represented a 34% premium to Super's share price before the suspension of trading on Monday.

Super shares were trading at S$1.26 after re-opening of Thursday, indicating a high degree of confidence that the deal will be completed.

The company reported it has "irrevocable commitments received from shareholders representing 60% of Super Group's issued shares to tender their shares in the offer".

If the tender, which would represent a total valuation of S$1.45bn, around $1.05bn, receives more than 90% shareholder take-up, Super will be delisted and made into a private entity.

A majority stake Douwe Egberts held by JAB Holding, which is owned by the billionaire Reimann Family.

Mondelez International, the publically traded food group, owns a minority stake.

Rapid expansion

JAB has been rapidly acquiring coffee brands, including Keurig Green Mountain, the Scandinavian coffee chain Espresso House, as well as donut company Krispy Kreme, which is currently working to expand its share of the coffee market.

But the deal marks JAB's first foray into the booming Asian coffee sector.

Global Coffee Monitor, Agrimoney's sister publication, sees coffee demand in Asia and Oceania up 1.5% in 2016-17, at a record 35.03m bags.

This would make the region the fastest growing coffee market, as well as the second largest, in the world.

Pierre Laubies, Douwe Egberts chief executive said the company was ready to "expand our footprint into the strategically important Southeast Asian growth region".

Robusta demand to drop

But Asian demand for instant coffee may prove less supportive.

Instant coffee is primarily made from robusta coffee, and supplies of the cheaper variety are likely to remain squeezed into next year.

Global Coffee Monitor actually sees robusta consumption in Asia and Oceania down 3.0%, although outweighed by soaring arabica consumption.

By William Clarke

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