Business Corpus: Starbucks Accelerates Buybacks, Targets $20 Billion Cash Returns After Nestle DealStarbucks plans to use proceeds from its marketing deal with Nestle to accelerate share buybacks and return $20 billion via buybacks and dividends through fiscal year 2020. The post Starbucks Accelerates Buybacks, Targets $20 Billion Cash Returns After Nestle Deal appeared first on Investor's Business Daily.

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Starbucks (SBUX) plans to use proceeds from its marketing deal with Nestle (NSRGY) to accelerate share buybacks and return $20 billion in cash to shareholders in the form of share buybacks and dividends through fiscal year 2020.

The news comes a week after Apple (AAPL) approved a new $100 billion repurchase program and increased its quarterly dividend by 16% to 73 cents, as S&P Dow Jones Indices estimates S&P 500 companies are on pace to return a record $1 trillion to shareholders this year alone via dividend payouts and share buybacks.

Under the agreement Starbucks-Nestle announced early Monday, Nestle will pay $7.15 billion to Starbucks to sell its packaged brand coffee as Nestle looks to move away from junk food.

Starbucks' packaged goods unit has annual revenue of $2 billion, roughly 9% of its revenue, and the deal doesn't include ready-to-drink coffee, tea or juices.

"This global coffee alliance will bring the Starbucks experience to the homes of millions more around the world through the reach and reputation of Nestle," said CEO Kevin Johnson, in a release.

Shares rose 0.7% to 58.07 soon after the open on the stock market today, well off premarket highs. Nestle's U.S.-listed shares weren't active early. Dunkin' Brands (DNKN), the owner of Starbucks rival Dunkin' Donuts, was up 0.55%.

Nestle already owns the Nespresso and Nescafe brands and the new deal will help it appeal to the U.S. market and counter gains by privately held JAB Holding, which owns Keurig Green Mountain and Peet's.

The deal also comes as Nestle focuses on health and wellness. In January, Nestle sold its U.S. confectionery business to Italy's Ferrero for $2.8 billion.

The companies expect the deal to be finalized in summer or early fall and Starbucks said it will be accretive to earnings per share by the end of fiscal year 2021.

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The post Starbucks Accelerates Buybacks, Targets $20 Billion Cash Returns After Nestle Deal appeared first on Investor's Business Daily.