Peet's Sweetens Diedrich Offer After GMCR Proposal

Raises its bid to $32 per share in cash and stock, or $261m

Peet's Coffee & Tea has raised its bid to acquire Diedrich Coffee to $32 per share in cash and stock, or $261m, after Green Mountain Coffee Roasters (GMCR) submitted a proposal to acquire Diedrich Coffee for $30 per share in cash, with a total enterprise value of approximately $247m.

Earlier this month, Peet's had entered into an agreement to acquire Diedrich in a cash-and-stock transaction valued at $26 per share or a total value of approximately $213m.

Patrick O’Dea, president and CEO of Peet's Coffee & Tea, said: “We were informed by Diedrich yesterday that it received a revised offer from Green Mountain increasing its price from $30 per share in cash to $32 per share in cash.

We appreciate the need to fully understand all elements and implications of both proposals, and believe our current proposal to be superior given the greater certainty of an expeditious closing and the potential upside for Diedrich’s shareholders through the Peet’s stock component.”

With this acquisition, Peet's aims to enter the single cup coffee market with specialty coffee brands helping to drive household penetration of the K-Cup brewer system by leveraging Peet's infrastructure and direct-store-delivery selling system.

According to GMCR, this transaction will enhance its brand differentiation across North America with an expanded portfolio of fast-growing consumer offerings, and by taking advantage of manufacturing, distribution and duplication of public company cost synergies.

Lawrence Blanford, president and chief executive officer of GMCR, said: “Diedrich's has three coffee brand platforms which will be complementary to GMCR's brands: Diedrich, Gloria Jean’s, and Coffee People. The Diedrich brand offers strong Southern Californian coffeehouse heritage and will work well alongside GMCR’s successful Tully’s brand in the Pacific Northwest.

“Gloria Jean’s is a premium coffee brand, widely known for its expertise in flavored coffees and indulgent beverages, and is highly visible in malls where Keurig brewers are sold. This is expected to broaden our flavored coffee and dairy-based beverage offerings.”

He added, “The Coffee People brand includes both straight-forward offerings like the successful Donut Shop as well as more creative and innovative product offerings like Jet Fuel, Wake-Up Call and Cowboy Coffee. These Coffee People varieties expand the appeal of the Keurig system to a broader range of coffee drinkers.”

Diedrich Coffee said that its board is currently reviewing both proposals and will make an announcement promptly after a determination is reached.