Peet’s, Diedrich Coffee Companies Merge
The two listed entities will join up to jointly try to take a better market share of the premium java market.
November 3, 2009
Peet’s Coffee & Tea will buy Diedrich Coffee in an all-stock deal.
Clearly, the coffee has some kick--news of the merger sent both companies’ shares up in morning trading; Diedrich traded up yesterday as well while Peet’s shares slipped about five percent.
The deal is valued at $213 million, with Diedrich being bought at $26 per share. Peet’s is entering the growing single-up space that has proven valuable to brewers and specialty companies.
Earlier this year, California-based Diedrich dumped its retail franchise business to Praise International North American Inc., an affiliate of Gloria Jean’s Coffees, for a scant $3.1 million.
The deal brings into Peet’s Diedrich’s portfolio of brands, its single-serve rights and its roasting and packaging facilities, which are responsible for the development of its single-serve packages.
Peet's will finance the deal through cash on hand (at both companies) and $140 million of committed debt financing.
The deal is expected to close by the end of 2009; comment was not available by press time.
Activity in the java space has not been cappuccino-frothy; Starbucks and Kraft entered into a partnership in which the Seattle-based coffee maker will sell now in French and German supermarkets and WalMart and Green Mountain Coffee Roasters entered into a similar agreement earlier this year.
Premium food retailers have been eyed for deals, however. Whole Foods sold $425 million worth of preferred stock -- convertible into a 17% stake -- to an affiliate of retail investment firm Leonard Green & Partners to shore up its cash position as the economy worsened. Ron Burkle and various entities controlled by his Yucaipa Cos. investment arm also took a stake in the premium retailer.
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