News

Peet's Coffee & Tea signs $1 billion sale

July 23, 2012

With its $1 billion deal for Peet’s Coffee & Tea that will take the company private, investment firm Joh. A. Benckiser is making a long-term bet on the growth of the U.S. specialty coffee market.

German-based JAB, which runs an investment portfolio consisting of high-end consumer goods companies, is paying $73.50 a share in cash, 32.5 times Peet’s estimated earnings for 2013 and 29 percent more than Peet's closing stock price of $57.16 on July 20.

Peet's is led by CEO Pat O'Dea, who is expected to remain at the company's helm.

San Francisco-based Peet's was founded in 1966. Today, the company runs 196 retail stores, most of which are in the western U.S. Peet’s sales at supermarket chains have been steadily rising since 2009, and last year, Peet’s struck a deal with Target, getting its coffee into 1,000 retail locations.

JAB's portfolio consists of Labelux, a luxury goods company with brands such as Jimmy Choo and Bally. The firm also is a majority stakeholder in the beauty company Coty Inc., and holds a minority investment in D.E Master Blenders 1753, an international coffee and tea company in the Netherlands that includes the single-serving Senseo brand.

"We are committed to owning and investing in companies with strong, premier-quality brands and great people whose values we share," Bart Becht chairman of JAB, said in a statement. "Peet's is just such a company and we look forward to preserving the company's culture and core values, while supporting management's vision for future growth."

Read more about coffee and specialty beverage trends.