Green Mountain to Buy Diedrich Coffee

Green Mountain to Buy Diedrich Coffee

Diedrich Coffee Inc. Tuesday said it agreed to be acquired by Green Mountain Coffee Roasters Inc., a deal which follows more than a monthlong bidding war for the single-serve coffee brand.

Under the deal, Green Mountain will acquire all of the outstanding shares of Diedrich for $35 in cash per share, or about $290 million.

Diedrich Coffee said it terminated a merger agreement with Peet's Coffee & Tea Inc. and that Green Mountain has paid Peet's the $8.517 million termination fee on behalf of Diedrich Coffee.

Peet's, which sells premium coffee and teas, was pursuing Diedrich to try to get a foothold into the fast-growing single-serve coffee market in the form of K-Cups, plastic pods used in Keurig coffee machines. The machines have exploded in popularity in recent years, as they offer a convenient way to brew a cup of coffee from a choice of flavors. Over the last year, Keurig shipped 1.6 billion K-Cup portion packs, up 63% from last year.

The Keurig technology is owned by Green Mountain, which appears to want to bring more of the brands licensed to sell K-Cups under its wings. Green Mountain recently bought a separate coffee brand, Timothy's Coffee of the World Inc., for $157 million.

Peet's had raised its bid to $32.50, but that offer expired, leaving the bid at $26. Peet's said late Monday that it wouldn't raise its offer. Peet's Chief Executive Patrick O'Dea said that Peet's deal could close in weeks while antitrust issues raised by a deal with Green Mountain remains subject to review.

However, analysts have said risk of the Green Mountain deal violating antitrust laws is minimal, because consumers have several other options for in-home coffee brewing besides the Keurig single-cup brewers Green Mountain and Diedrich provide.

Peet's failed to submit a new proposal to Diedrich Coffee by the Monday deadline, Diedrich Coffee said.