Peet's Coffee back to $26 a share bid for Diedrich

AP News
Posted: Dec 07, 2009 6:54 PM

Peet's Coffee & Tea said Monday it wouldn't bid more for Diedrich Coffee Inc., but it also refused to end its monthlong effort to buy the roaster, arguing that an offer from Green Mountain Coffee Roasters Inc. may face challenges.

In a statement Monday afternoon, Peet's acknowledged Green Mountain's competing all-cash bid _ which already has the support of Diedrich's board _ was superior to its own offer.

But the coffee house chain, based in Emeryville, Calif., said a combination of Diedrich, based in Irvine, Calif., and Green Mountain, based in Waterbury, Vt., would likely face scrutiny from federal regulators, who could derail the deal.

Peet's executives said they hope that's enough to scuttle Green Mountain's bid.

"It is our view that there are significant antitrust issues and resulting timing and closure risks associated with GMCR's competing proposal," Peet's CEO Patrick O'Dea said in a statement. "In the meantime, while GMCR's proposal undergoes regulatory review ... we stand ready to close a transaction swiftly."

Peet's and Green Mountain have been fighting to acquire Diedrich for weeks, each hoping to own the company's license to produce popular single-serve coffee pods called K-Cups that are used in Keurig Inc.'s brewing system.

Green Mountain's latest offer _ $290 million, or $35 per share _ came last week. It trumped Peet's now-expired cash-and-stock offer of roughly $32.50 per share, or $269 million.

After that sweetened offer expired, Peet's said it stood by its early November bid of $26 per share in cash and stock.

Green Mountain, which owns the Keurig system, already owns three other K-Cup licensees and some analysts predict the company could control about 85 percent of K-Cup sales if it succeeds in buying Diedrich. At least two of the other deals didn't require regulatory approval.

Peet's would be new to the growing market for K-Cups if it wins Diedrich.

Peet's shares fell 86 cents, or 2.7 percent, to end regular trading at $30.99 Monday.

Green Mountain shares fell 80 cents, or 1.3 percent, to $60.39.

Diedrich shares fell 20 cents to $35.15.