Nestle has announced that it will pay Starbucks $7.1bn (£5.2bn) to sell the company’s coffee into homes.
The Nescafe and Nespresso owner will own the rights to market Starbucks’ coffee, which it says generates $2bn in annual sales.
Nestle chief executive Mark Schneider described it as a “significant step”.
Mr Schneider, who in 2016 became the first outsider to run Nestle in almost 100 years, is attempting to boost the company’s profit through expansion.
The Swiss consumer goods giant said 500 Starbucks employees will transfer over to its business but they will continue to be located in Seattle, the group’s headquarters for the last 47 years.
Last year, Nestle paid an estimated $425m for a 68% stake in Blue Bottle Coffee, a California-based company that sells coffee to customers online and has a number of shops in the US and Japan.
The company recently sold its US sweets and chocolate business, including brands such as Crunch and Butterfinger, to Ferrero Group for 2.7bn Swiss francs (£1.9bn)
Mr Schneider described the “global coffee alliance” with Starbucks as “a great day for coffee lovers around the world”.