Mondelez 2014 Annual Report Download - page 70

Table of Contents
Note 2. Divestitures and Acquisitions
Planned Coffee Business Transactions:
On May 7, 2014, we announced that we entered into an agreement to combine our wholly owned coffee portfolio (outside of
France) with D.E Master Blenders 1753 B.V. (“DEMB”). In conjunction with this transaction, Acorn Holdings B.V. (“AHBV”),
owner of
DEMB, has also made a binding offer to receive our coffee business in France. The parties have also invited our partners in certain
joint ventures to join the new company.
Upon completion of all proposed transactions, we expect to receive cash of approximately € 4 billion and a 49 percent equity
interest in the new company, to be called Jacobs Douwe Egberts (“JDE”). AHBV will hold a majority share in the proposed
combined company and will have a majority of the seats on the board, which will be chaired by current DEMB Chairman Bart Becht.
We will have certain minority rights. AHBV is owned by an investor group led by JAB Holding Company s.à r.l.
Once we have contributed our coffee businesses to the joint venture, we expect to record our interest in the joint venture as an
equity method investment on our consolidated balance sheet and to include our share of its earnings prospectively within our
continuing results of operations. We also anticipate recording a gain on the divested assets of our coffee business portfolio. At this
time, we do not expect the coffee business divestiture to qualify for discontinued operations presentation because it does not
represent a strategic change in our business nor is it expected to have a major effect on our results of operations as we will retain
an approximate 49% interest in the combined joint venture with the DEMB business.
The transactions remain subject to regulatory approvals and the completion of employee information and consultation
requirements. We continue to expect the transactions to be completed in 2015, subject to closing conditions, including regulatory
approvals. In December 2014, the European Commission announced its intention to further evaluate the proposed transaction
against EU antitrust regulations and in order to make a final determination on merger clearance, which we currently expect in the
second half of 2015. We and DEMB also continue to undertake consultations with Works Councils and employee representatives
as required in connection with the transactions.
In connection with the expected receipt of approximately € 4 billion upon closing, we entered into currency exchange forward
contracts in the second quarter of 2014 to lock in an expected U.S. dollar value of approximately $5 billion. As of December 31,
2014, the forward contracts were recorded as derivative assets within other current assets and through December 31, 2014, we
recognized $628 million of unrealized gains related to the hedges within interest and other expense, net. On February 11, 2015, we
monetized the forward contracts and recorded an additional realized gain of $311 million in the first quarter of 2015, for a total
realized gain of $939 million. We also entered into new currency exchange forward contracts to continue to lock in an expected
U.S. dollar value of approximately $5 billion from the transactions. Based on changes in the euro/U.S. dollar exchange rate, the
actual closing date of the planned JDE coffee transactions and the settlement dates of the hedges or other hedges we may put into
place, the actual amount of U.S. dollars we receive could change. In addition to the hedges, we have also incurred incremental
expenses related to readying our coffee businesses for the planned transactions which totaled $77 million through December 31,
2014 and were recorded within selling, general and administrative expenses of our Europe and EEMEA segments and within our
general corporate expenses.
Spin-Off of Kraft Foods Group:
On the Distribution Date, we completed the Spin-Off of Kraft Foods Group. Each of our shareholders of record as of the close of
business on September 19, 2012 (“the Record Date”) received one share of Kraft Foods Group common stock for every three
shares of our Common Stock held as of the Record Date. The distribution was structured to be tax free to our U.S. shareholders for
U.S. federal income tax purposes. Following the Spin-Off, Kraft Foods Group is an independent public company and we do not
beneficially own any shares of Kraft Foods Group common stock.
The divested Kraft Foods Group business is presented as a discontinued operation on the consolidated statements of earnings in
2012 when the Spin-Off occurred and, as further noted below, in 2013 due to the resolution of the Starbucks arbitration and the
gain we recognized related to the Kraft Foods Group business. The Kraft Foods Group other comprehensive earnings, changes in
equity and cash flows are included within our consolidated statements of comprehensive earnings, equity and cash flows through
October 1, 2012.
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