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Green Mountain outbids Peet's for Diedrich Coffee |
12.11.2009
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IRVINE, Calif.-Outbidding its competitor Peet's Coffee and Tea, Green Mountain Coffee Roasters submitted the winning bid-$35 per share or about $290 million-to buy Diedrich Coffee Inc. here and its license to produce the single-serve coffee pods called K-Cups that are used in Keurig Inc.'s brewing system-on Dec. 8.
Green Mountain also agreed to pay an $8.5 million termination fee to Peet's Coffee and Tea, which had agreed to buy Diedrich before GMCR stepped in.
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The two coffee companies both submitted multiple bids to buy Diedrich Coffee. Peet's original offer, submitted Nov. 2, was for $26 per share.
On Dec. 7, Peet's said it would not up is price and that the company would leave in place its offer to acquire Diedrich for a combination of cash and stock valued at $26 per share.
"We believe that a combination of Peet's and Diedrich would enhance competition in the K-Cup single-serve market, benefiting retail trade customers, consumers and the future growth of the Keurig single cup brewing system," said Patrick O'Dea, President and CEO of Peet's, in a prepared statement "...Conversely, it is our view that there are significant antitrust issues and resulting timing and closure risks associated with GMCR's competing proposal... We remain excited by the opportunity to compete in the single serve K-Cup market through an acquisition of Diedrich and believe this course is in the best interests of the shareholders of both companies.
Peet's, in 1966 in Berkeley, California by Alfred Peet, offers quality coffees and teas in multiple forms-but has yet to break into the K-Cup market.
GMCR is positioning itself to dominate the K-cup market. In 2009, it bought Tully's and Timothy's, licensees for the K-cup refills used in its single-cup Keurig brewers.
In a prepared statement, GMCR's president Lawrence J. Blanford said "This combination further advances our objective of becoming a leader in the highly fragmented and competitive coffee and coffee maker businesses and provides significant growth opportunities for GMCR stakeholders. In particular, adding Diedrich's three strong brand platforms, which are highly complementary to GMCR's brands, as well as its manufacturing and distribution facilities in California will, upon completion of this transaction, enable us to more effectively reach consumers across North America and do so with an enhanced array of coffee choices."
GMCR's operations are managed through two business units. The Specialty Coffee business unit produces coffee, tea and hot cocoa from its family of brands, including Tully's Coffee, Green Mountain Coffee, Newman's Own Organics coffee and Timothy's World Coffee. The Keurig business unit is a leading manufacturer of K-Cup portion packs for Keurig Single-Cup Brewers.
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