WATERBURY Vt. The bidding war for Diedrich Coffee Inc. moved from money to words Tuesday as Green Mountain Coffee Roasters Inc. said it is weighing a response to a $32.50-per-share offer for Diedrich made late Monday by Peet’s Coffee & Tea Inc.
Emeryville, Calif.-based Peet’s early last month offered $26 in cash and stock for each share in Irvine, Calif.-based Diedrich, but was countered by Green Mountain, which bid $30 a share in cash. Peet’s countered the counter with a bid of $32 a share in cash and stock, which Green Mountain of Waterbury, Vt., matched with an all-cash deal that Diedrich’s board ultimately decided last week was the superior offer.
Peet’s, an operator of 195 coffee bars as well as a purveyor of specialty coffees to grocery and foodservice buyers, on Monday re-entered the competition for Diedrich with a $32.50-per-share offer. The deal is structured with a sliding cash component ranging from $21.26 to $22.87 per share so that, absent an extreme swing in Peet’s stock price, Diedrich shareholders are guaranteed $32.50 per share in compensation.
In a statement late Monday, Peet's officials said they believe they could finalize a Diedrich acquisition before the end of the year or by February 2010 at the latest. In contrast, Diedrich and Green Mountain earlier had said that the merger likely would close in “early 2010” but possibly as late as June should antitrust concerns among regulators, if any, need to be assuaged.
“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,” said Patrick O’Dea, Peet’s chief executive and president.
However, Green Mountain officials shot back Tuesday, describing Peet's claim of a timing advantage as "significantly exaggerated."
"Peet’s is now resorting to misrepresentations in the absence of being able to offer significantly more value to Diedrich shareholders," Green Mountain said in a statement.
“Additionally, GMCR’s all-cash offer continues to be the superior proposal of record,” the Green Mountain statement continued. “In contrast, Peet’s offer has a significant stock component and its shares have demonstrated significant volatility over the last 90 days. GMCR believes that Diedrich shareholders will recognize that a transaction with Peet’s would result in a highly leveraged company.”
Adeal calling for compensation to Diedrich shareholders of $32.50 per outstanding share would put the total value of the transaction at about $268 million.
Both Peet’s and Green Mountain have been courting Diedrich Coffee especially for its expertise in producing and selling specialty coffees for K-Cups used in Keurig Inc.’s popular single-cup brewing system and its roasting capabilities. Keurig is owned by Green Mountain. The acquirer also would pick up Diedrich’s Coffee and Coffee People brands, as well as control of the single-serve rights to the Gloria Jean’s coffee label.
Contact Alan J. Liddle at [email protected].
