Green Mountain sweetens bid for Diedrich Coffee

AP News
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Posted: Nov 24, 2009 11:31 AM

Green Mountain Coffee Roasters sweetened its offer for Diedrich Coffee by $2 per share on Tuesday, matching a rival bid from Peet's Coffee & Tea.

Tuesday's bid comes two days after Peet's raised its own offer for Diedrich, hoping to get a foothold in the wholesaler's popular and growing single-serve coffee pod business.

Green Mountain's all-cash proposal of $32 per share has a total value of $265 million. Peet's second offer _ a cash-and-stock bid submitted Sunday evening _ is also valued at $265 million.

Green Mountain said its revised offer provides Diedrich shareholders with a substantial all-cash premium and greater value.

Green Mountain's bid represents a 57 percent premium to Diedrich's closing stock price on Nov. 2, the last trading day before news emerged of a proposed tie-up between Diedrich and Peet's.

Diedrich said its board is considering the dueling offers.

Both Peet's and Green Mountain are hoping for a stake in Diedrich's K-Cup business. The wholesaler is one of four companies licensed to make the single-serving coffee used in the popular Keurig Inc. brewing system, which is already owned by Green Mountain.

Green Mountain, based in Waterbury, Vt., acquired another K-Cup licensee earlier this month for $157 million. If it succeeds in its quest to acquire Diedrich, it would control about 85 percent of K-Cup sales, analyst said.

Under the terms of Peet's most recent proposal, the Emeryville, Calif., coffee company said it will pay $19.80 in cash and 0.321 of one share of Peet's common stock for each share of Diedrich common stock.

The value of the stock component will rise and fall with changes in Peet's stock price.

Green Mountain shares fell $1.18 to $64.26 in midday trading Tuesday. Diedrich shares dipped 23 cents to $33.42. Meanwhile, Peet's shares rose 66 cents, or 2 percent, to $33.72.