Mondelez and Douwe Egberts (D.E. Master Blenders) will link their coffee businesses together as Mondelez concentrates increasingly on its snack foods division and cost cutting.
The deal is part of a $3.5 billion restructuring program underway at Mondelez that is projected to create $1.5 billion in savings by 2018.
Mondelez, which makes Oreo and Chips Ahoy cookies, Trident gum and Cadbury chocolate, split from Kraft Foods Group Inc. in late 2012.
The newly formed coffee producer will sell Gevalia, Tassimo and Jacobs, which are Mondelez brands, and Senseo and Douwe Egberts from D.E. Master Blenders, formerly the Sara Lee coffee business.
The new company, with annual revenue of more than $7 billion, will be called Jacobs Douwe Egberts and it will be headquartered in the Netherlands.
Mondelez International Inc. had about $3.9 billion in revenue from the coffee business in 2013, while D.E. Master Blenders 1753 B.V. had approximately $3.4 billion. About 85% of overall revenue at Mondelez will come from its snacks once the coffee deal is complete.
The deal only includes Mondelez's coffee portfolio outside of France. Acorn Holdings, which owns D.E. Master Blenders, has made a separate offer for the French business.