Peet’s Raises Bid to $32.50

Whatever is in that K-Cup license, someone wants its very badly.

Peet’s Coffee & Tea Inc. raised its bid to buy Diedrich Coffee Inc., the maker of single-serve coffee packets, for the second time to $32.50 a share, topping the latest offer from Green Mountain Coffee Roasters Inc.
Peet’s boosted the cash portion of its bid to a range of $21.26 to $22.87, plus 0.321 share of its own stock, for each Diedrich share, the Emeryville, California-based company said yesterday in a statement. The offer totals $32.50 a share at any price of Peet’s stock from $30 to $35. Last week, Peet’s offered as much as $32 a share, including $19.80 in cash, while Green Mountain raised its bid to $32 a share in cash, or $265 million.
The companies are vying for Diedrich’s K-Cup business, the maker of prepackaged coffee cups used in Green Mountain’s Keurig brewing equipment. Green Mountain has been consolidating K-Cup manufacturing, which is about twice as profitable as collecting royalty fees, according to Mitchell Pinheiro, an analyst with Janney Montgomery Scott LLC in Philadelphia.
“Green Mountain could counter with an increased offer, as the company seems committed to rolling up its K-cup licensees,” David Tarantino, an analyst with Robert W. Baird & Co. in Milwaukee wrote in a note. He recommends buying Peet’s and doesn’t rate the other stocks.

This almost reads like a movie. As a business enterprise, Diedrich is pretty much a joke. But they have a license which is very valuable yet no one seems to know what it exactly entails. Let me change that — someone knows and they’re willing to pay a lot for it. Peet’s is now willing to pay $32.50 for a stock that was worth 21 cents a few months ago.
Who needs gold when there’s coffee? (John Hempton has more.)

Posted by on December 1st, 2009 at 11:23 am


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