Diedrich Coffee Inc., Irvine, Calif., is evaluating purchase offers from Green Mountain Coffee Roasters Inc. (GMCR), Waterbury, Vt., and Peet’s Coffee & Tea Inc., Emeryville, Calif. Diedrich announced today that Monday evening it received a revised offer from GMCR that proposed acquiring all of the outstanding shares of common stock of Diedrich Coffee for $32 per share in cash, an increase of $2 per share over GMCR's prior offer.
GMCR submitted its revised offer in response to a binding offer received by Diedrich Coffee from Peet's to pay to Diedrich Coffee's stockholders a combination of $19.80 in cash and 0.321 of a share of Peet's common stock for each share of Diedrich common stock tendered and accepted in its exchange offer, representing total consideration of $32 per share based on Peet's closing price on Nov. 20 of $38 per share. The stock component of the revised purchase price is based on a fixed exchange ratio, so the value of that component will increase or decrease with changes in the market price of Peet's common stock. On Monday, as required under the terms of the existing merger agreement with Peet's, Diedrich Coffee transmitted to Peet's notice of GMCR's revised offer.
After reviewing the initial $30 per share offer from GMCR, the board of directors of Diedrich Coffee had determined that it constituted a "superior proposal" to the terms of the existing merger agreement between Peet's and Diedrich Coffee. Under the terms of the existing merger agreement Diedrich entered into with Peet's on Nov. 2 the agreement remains in effect until at least 5 p.m. Pacific Time on Nov. 27 and until that time (as it may be extended to the extent provided in the agreement), Peet's has the right to amend its offer.
GMCR said in a release today that it believes its revised offer constitutes a “superior proposal,” as defined in the existing merger agreement between Diedrich and Peet’s to Peet’s cash and stock proposal.
Lawrence J. Blanford, GMCR’s president and chief executive officer, said in a statement: “We remain firmly committed to this strategic combination with Diedrich. We believe our revised offer constitutes a superior proposal to Peet’s Nov. 22, 2009, offer, as it provides Diedrich shareholders with a substantial all-cash premium as well as greater value and greater certainty and speed of closing. This transaction will build upon the success of GMCR’s family of brands across North America and further advance GMCR’s objective of becoming a leader in the highly fragmented and competitive coffee and coffee maker businesses. We look forward to working with the Diedrich.”
Today, Peet’s President and Chief Executive Officer Patrick O'Dea also issued a statement: "We were informed by Diedrich yesterday that it received a revised offer from Green Mountain increasing its price from $30 per share in cash to $32 per share in cash. Diedrich indicated to us that its board of directors required additional time to analyze the proposal relative to Peet's combined cash-and-stock proposal currently valued at $30.41 per share based on Peet's closing price yesterday, Nov. 23, 2009, of $33.06.
"We appreciate the need to fully understand all elements and implications of both proposals, and believe our current proposal to be superior given the greater certainty of an expeditious closing and the potential upside for Diedrich's shareholders through the Peet's stock component."
In light of the different forms of consideration in the current Peet's offer and the current GMCR offer, Diedrich Coffee's board is analyzing the two offers to determine whether the GMCR offer continues to be a superior proposal to the terms of the Peet's merger agreement and the exchange offer contemplated thereby (as amended by the current offer received from Peet's). Diedrich Coffee intends to make an announcement promptly after a determination is reached by the board of directors.