Industry & Business

Mondelez International to Receive $2.7 Billion Compensation Payment From Starbucks

 Breaking News

Mondelez International to Receive $2.7 Billion Compensation Payment From Starbucks

Mondelez International to Receive $2.7 Billion Compensation Payment From Starbucks
November 13
12:54 2013

The independent arbitrator in the dispute between Kraft Foods and Starbucks Coffee Company in the US has ruled that Starbucks must pay more than $2.7 billion in total cash compensation for its unilateral termination of the companies’ coffee contract. The award includes compensation for the fair market value of the agreement, a premium for improper termination and interest.

In October 2012, Mondelez International spun off Kraft Foods Group, its North American grocery operations, as an independent company. Based on the separation and distribution agreement between the companies, Kraft Foods Group will direct the net proceeds from the award to Mondelez International.

“We’re pleased that the arbitrator validated our position that Starbucks breached our successful and long-standing contractual relationship without proper compensation,” says Gerd Pleuhs, executive vice president legal affairs & general counsel of Mondelez International. “We’re glad to put this issue behind us.  We can now fully focus on growing our global snacks business.”

Kraft first began marketing Starbucks roast and ground coffee in 1998 and succeeded in building a highly profitable CPG business, from a base of approximately $50 million to approximately $500 million in 2010. In November 2010, Starbucks announced its intention to unilaterally terminate the agreement that provided Kraft with the exclusive rights for the sales, marketing and distribution of Starbucks roast and ground coffee in grocery and other retail outlets. Later that month, Kraft initiated arbitration proceedings to challenge the improper termination of the companies’ contract.

Mondelez International says that it intends use the net proceeds from the arbitration award, after federal and state taxes of approximately 37% and certain other expenses, to repurchase Mondelez International Class A Common Stock, subject to final approval by the Board of Directors and actual receipt of the proceeds. This authorization would be in addition to the company’s current $6 billion share repurchase program.


Warning: count(): Parameter must be an array or an object that implements Countable in /home/industryandbusin/public_html/wp-content/themes/legatus-theme/includes/single/post-tags.php on line 5
Share

About Author

mike

mike

Related Articles

New Subscriber

Subscribe Here



Advertisements





















National Manufacturing Conference & Exhibition 2018

NIBRT Springboard Success Stories



Upcoming Events

[eventlist]