Peet's Coffee & Tea Inc. and Diedrich Coffee Inc. have announced that they have entered into a definitive agreement under which Peet's will acquire Diedrich in a cash-and-stock transaction valued at $26 per share or a total value of approximately $213 million.
As a part of the transaction, Peet's will acquire Diedrich's portfolio of brands including Diedrich Coffee, Coffee People and the single-serve rights to the nationally recognized Gloria Jean's coffee brand. Peet's also will acquire Diedrich's roasting and packaging facility capable of roasting and packaging unflavored and flavored coffees, with significant current and future K-Cup production capacity.
With this acquisition, Peet's will enter the single-cup coffee market with strong specialty coffee brands to help drive household penetration of the K-Cup brewer system. Diedrich, a wholesale coffee roaster and distributor, is almost exclusively focused on the production and sale of K-Cups for Keurig Incorporated's top selling single-cup brewing system through a license with Keurig.
"Over the past 7 years we've built the organization, roasting plant, IT and DSD sales infrastructure to expand the Peet's brand into homes across the country without compromising our distinctive quality and superior freshness standards," said Patrick O'Dea, president and CEO of Peet's. "This has driven a 42 percent compound annual growth rate in our packaged coffee business during that time and solidified Peet's position as the premier quality specialty coffee brand."
Upon completion, the transaction will provide Diedrich shareholders with cash, as well as the opportunity for continued ownership of an interest in the combined company through the stock component of the purchase price. The acquisition is structured as a two-step transaction consisting of an exchange offer for all of the outstanding shares of Diedrich common stock followed by a merger of a Peet's subsidiary into Diedrich. For each share of Diedrich common stock tendered and accepted in the exchange offer or converted in the merger, Peet's will pay a combination of $17.33 in cash and a fraction of a share of Peet's common stock having a value of approximately $8.67.
The acquisition has been unanimously approved by the board of directors of each company and is subject to regulatory approval and certain other closing conditions. The acquisition is expected to be dilutive to earnings in 2010 and accretive thereafter and is expected to close by end of the calendar year 2009.
