Peet’s Coffee & Tea Sweetens Diedrich Offer

Its all-cash offer continues to be the superior proposal, says GMCR

Peet’s Coffee & Tea has reinstated and enhanced its previously expired proposal to acquire Diedrich Coffee for stock and cash valued at $32.50.

Under its enhanced proposal, which is based on Peet’s current stock price, the stock component remains at 0.321 of a share of Peet’s common stock, and the cash component will be an amount between $21.26 and $22.87 such that the value of the total consideration paid per Diedrich share equals $32.50 for all Peet’s common stock prices between $30 and $35.

In response to Peet’s revised offer, Green Mountain Coffee Roasters (GMCR) said that its all-cash offer continues to be the superior proposal of record. In contrast, Peet’s offer has a significant stock component and its shares have demonstrated significant volatility over the last 90 days.

Lawrence Blanford, president and CEO of GMCR, said: “We are focused on creating value for our shareholders. In that regard, we remain firmly committed to this strategic combination and are in the process of evaluating our next steps.”

With respect to timing, GMCR noted that it has thoroughly evaluated this transaction and is confident it can close promptly in early 2010. GMCR said that Peet’s comments regarding a perceived timing advantage are significantly exaggerated and that Peet’s is now resorting to misrepresentations in the absence of being able to offer significantly more value to Diedrich shareholders.

When Peet’s originally presented its November 22, 2009 proposal, Peet’s stock price was $38, which valued the proposal at $32 per Diedrich share. By November 24, 2009, following the announcement of a competing bid for Diedrich by GMCR, Peet’s proposal was valued at $30.35 per Diedrich share based on the $32.86 closing price of Peet’s common stock on November 24, 2009.

Peet’s intends to close the transaction before year-end 2009, while GMCR indicated a closure of its proposed transaction in early 2010. In addition, GMCR’s proposed definitive agreement with Diedrich allows it to extend the latest date by which the transaction must be completed to June 29, 2010 in the event of failure to obtain Hart-Scott-Rodino antitrust clearance. Peet’s accelerated the corresponding date in its enhanced proposal from March 31, 2010 to February 15, 2010, with no extension for Hart-Scott-Rodino clearance. Peet’s views these timing differences to be a material factor in making Peet’s proposal superior to GMCR’s.

Under Peet’s enhanced proposal, as with its previous proposal, outstanding warrants and options to acquire Diedrich common stock will also be converted into the right to receive a combination of cash and shares of Peet’s common stock.

Patrick O’Dea, president and CEO of Peet’s, said: In light of the antitrust challenges that Diedrich and GMCR acknowledge in their proposed agreement, along with the higher price, upside potential and greater protection against downside risk in our proposal, we strongly believe this new proposal to be clearly superior to the GMCR offer.

“We continue to believe that our acquisition of Diedrich would create significant value for the stockholders of both companies.”

Peet’s plans to finance the cash portion of the acquisition through a combination of cash on hand and $175m of committed debt financing from Rabobank Nederland.