The European Commission has approved a joint venture between Mondelez International (MDLZ.O) and D.E Master Blenders to create the world's biggest standalone coffee company on condition they sell some businesses first.
The EU executive said on Tuesday that Mondelez of the United States must sell its Carte Noire business across the European Economic Area (EEA) and Dutch firm DEMB has to sell its Merrild business across the EEA and license its Senseo brand in Austria.
The new joint venture, to be called Jacobs Douwe Egberts, is the result of a string of acquisitions by DEMB's owners as they aim to take on market leader Nestle (NESN.VX) at a time more people around the world are drinking better quality coffee.
Reuters reported in February that Italy's Lavazza had exclusive first rights to consider buying Carte Noire, based on an agreement it had when the U.S. and Dutch firms had been planning to offload the L'Or and Grand Mere brands.
Mondelez and DEMB proposed selling Carte Noire after that original plan to sell the other two brands failed to soothe the EU's competition concerns.
Lavazza, which has said it planned to make a decision on Carte Noire by the end of June, also declined to comment on Tuesday.
Mondelez and DEMB expect their venture to be finalised this year. Under the terms of the deal, Mondelez will receive 4 billion euros ($4.5 billion) in cash and a 49 percent stake in Jacobs Douwe Egberts.
Jacobs, which will still be a distant No. 2 behind food and drinks giant Nestle, will have annual revenue of more than 5 billion euros and brands including Jacobs, Tassimo and L'Or.
JAB's partners include BDT Capital, run by Warren Buffett's longtime advisor Byron Trott; Quadrant Capital, run by SABMiller board member Alejandro Santo Domingo, and affiliates of some of the founding families of Anheuser-Busch InBev.