Starbucks must pay Kraft Foods US $2.76 billion

What? Starbucks must pay Kraft Foods US $2.76 billion for breaking the Companies grocery deal three years early.
Why it matters? The deal was set to expire in March 2014, and automatically renew for successive 10-year terms,  but it was finished sonner than the agreement.

starbucksThe companies grocery deal was ended three years early by Starbucks.  Kraft was selling bags of Starbucks coffee in grocery stores, but Starbucks prematurely ended the contract in March 2011 and gave the business to privately held Acosta Inc., accusing Kraft of multiple material breaches of contract, including mismanaging the brand.

Now, Starbucks must pay Kraft Foods US $2.76 billion. Mondelez International Inc , which derived from Kraft Foods as an independent company, will receive all profits from the dispute under an agreement between the two companies.

According to rules of the arbitration, Starbucks must pay US $2.23 billion in damages plus US $527 million for interest and legal fees. Whatsmore, the company cannot appeal. The payment assimilates what Kraft had first required.

As a consequence, Shares in Starbucks dropped 1.2 percent at US $79.41 in extended trading.

Starbucks does not agree with the arbitror’s conclusion but will adequate to the payment in the form of cash and with its available borrowing capacity.

The contract was prematurely concluded in March 2011 and the business given later to privately held Acosta Inc.

Starbucks blamed Kraft for multiple material breaches of contract and mishandling the brand. Kraft denied that and alleged that Starbucks must pay a reasonable value for the business if it wanted Kraft out.

The deal was set to expire in March 2014, and automatically renew for successive 10-year terms except it is finished sooner per the agreement.

Source: reuters 

 


Editorial Staff (@portada_online)

Portada is the leading source of news and analysis on the Latin Marketing and Media space. Credibility is our biggest asset: The Portada team is very passionate about producing high-quality independent content that helps drive forward the Latin Marketing and Media space.
El equipo editorial de Portada se apasiona por elaborar contenidos de alta calidad. La credibilidad es nuestro mayor activo. La misión de Portada es ayudar a profesionales de negocios y medios a comprender y alcanzar a consumidores latinoamericanos, del mercado hispano de EE UU y España.

MORE FROM PORTADA

#Portada16: Are Multicultural Media Buying Agencies Necessary?

#Portada16: Are Multicultural Media Buying Agencies Necessary?

One of the key highlights of the many sessions of #Portada16, co-produced with MediaPost last week, was the panel "Do Multicultural Media Buying Agencies have a Reason to Exist? The panelists argued passionately on a topic that is at the very crux of Multicultural Marketing and Media.


Lionsgate & Univision Launch Spanish-Language Movie Streaming Service 

Lionsgate & Univision Launch Spanish-Language Movie Streaming Service 

Lionsgate, the next generation global content leader, and Univision Communications Inc. are teaming to launch a premium subscription video on demand (SVOD) service for the booming Hispanic movie-going audience in the U.S.The new premium on demand movie service will tap base of more than 50 million hispanic consumers in the U.S.


IPG Mediabrands and Innovid Announce Partnership, New Technology to Improve OTT Video Experience

IPG Mediabrands and Innovid Announce Partnership, New Technology to Improve OTT Video Experience

IPG Mediabrands and Innovid have launched a partnership and set of products that could make waves in the video advertising world.