Tuesday, December 8, 2009

A conclusion to the coffee wars!! (DDRX, PEET, GMCR)

All done, we can move on.  For a summary of the battle for Diedrich Coffee, refer to my posts here and here.

Knowing that their cash and stock bid for Diedrich Coffee (DDRX) was inferior to the bid by Green Mountain (GMCR), Peet's Coffee(PEET) put out a release last night that effectively threw in the towel.  By letting their $32.50 per share offer expire, all that remained was PEET's initial $26 per share offer.  With DDRX trading in near the mid thirty's due to Green Mountain's all-cash $35 offer, there is no way the PEET's bid of $26 would be accepted, although they do say they're ready and willing at that price:

“We believe that a combination of Peet’s and Diedrich would enhance competition in the K-Cup single serve market, benefiting retail trade customers, consumers and the future growth of the Keurig single cup brewing system,” said Patrick O’Dea, President and CEO of Peet’s. “We expect to be in a position to close a transaction within a matter of weeks. Conversely, it is our view that there are significant antitrust issues and resulting timing and closure risks associated with GMCR’s competing proposal. In the meantime, while GMCR’s proposal undergoes regulatory review, our original exchange offer of $26.00 in cash and stock will remain in place and we stand ready to close a transaction swiftly. We remain excited by the opportunity to compete in the single serve K-Cup market through an acquisition of Diedrich and believe this course is in the best interests of the shareholders of both companies,” said O’Dea.

Kudo's to PEET's.  They upped their initial bid significantly, and were ready to pay around 20times earnings, but they were aware of Greeen Mountain's bigger pocketbooks, and did not budge from their increased bid.

The deal was wrapped up this morning, with Diedrich agreeing to be acquired by Green Mountain for the $35 in cash previoulsy offered.

 "Notwithstanding the termination of the Peet's merger agreement and the director and officer stockholder agreements, Peet's has announced its intention to continue its exchange offer to acquire all of the outstanding shares of Diedrich Coffee for a combination of cash and a fraction of a share of Peet's common stock representing total consideration of $26.00 per share (or less under certain circumstances described in Peet's exchange offer).

In light of the determination of the Board of Directors of Diedrich Coffee that the $35.00 per share, all-cash GMCR transaction is superior to Peet's exchange offer, the Board of Directors of Diedrich Coffee recommends that stockholders do not tender their shares in Peet's exchange offer. Instead, the Board of Directors recommends that stockholders tender their shares in the tender offer that will be commenced by  GMCR.

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