NEW YORK (TheStreet) -- Shares of Mondelez International Inc. (MDLZ) are surging, up 8.18% to $38.10 in pre-market trade, after it was announced that Mondelez and D.E. Master Blenders will link their coffee businesses together as Mondelez concentrates increasingly on its snack foods division and cost cutting, the Associated Press reports.
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 AP noted.
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, according to the AP.
Mondelez International Inc. had about $3.9 billion in revenue in 2013, while D.E. Master Blenders 1753 B.V. had approximately $3.4 billion.
TheStreet Ratings team rates MONDELEZ INTERNATIONAL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate MONDELEZ INTERNATIONAL INC (MDLZ) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."