Peet's Coffee & Tea, Inc. (NASDAQ: PEET) and Diedrich
Coffee, Inc. (NASDAQ: DDRX) announced today that they have entered
into a definitive agreement under which Peet’s will acquire
Diedrich in a cash-and-stock transaction valued at $26.00 per share
or a total value of approximately $213 million. The acquisition
will further solidify Peet’s leading position in the specialty
coffee and tea market, with premium quality brands in every segment
of the category.
With this acquisition, Peet’s will enter the rapidly growing
single cup coffee market with strong specialty coffee brands
helping to drive household penetration of the K-Cup brewer system
by leveraging Peet’s infrastructure and direct-store-delivery
selling system. Diedrich, a wholesale coffee roaster and
distributor, is almost exclusively focused on the production and
sale of K-Cups® for Keurig Incorporated’s top selling single-cup
brewing system through a license with Keurig. As a part of the
transaction, Peet’s will acquire Diedrich’s portfolio of brands
including Diedrich Coffee, Coffee People and the single serve
rights to the nationally recognized Gloria Jean’s coffee brand.
Peet’s will also be acquiring Diedrich’s roasting and packaging
facility capable of roasting and packaging unflavored and flavored
coffees, with significant current and future K-Cup production
capacity.
Upon closing, Diedrich’s business will immediately benefit from
the infrastructure that Peet’s has developed to support large
scale, national growth of its premium quality coffees, including
its freshness-sensitive direct store delivery (DSD) selling and
merchandising system to grocery stores.
“Over the past 7 years we’ve built the organization, roasting
plant, IT and DSD sales infrastructure to expand the Peet’s brand
into homes across the country without compromising our distinctive
quality and superior freshness standards,” said Patrick O’Dea,
President and CEO of Peet's. “This has driven a 42% compound annual
growth rate in our packaged coffee business during that time and
solidified Peet’s position as the premier quality specialty coffee
brand.”
“Consistent with our vision to be the gold standard specialty
coffee company with leading premium quality brands in every segment
of the category, we recently launched a line of premium Godiva
coffees in the medium roast and flavored segments with excellent
sell-in success. The Diedrich acquisition represents another major
strategic growth initiative for our consumer packaged coffee
business, by entering and driving adoption of the single cup
segment through Diedrich’s high-growth K-Cup business,” said
O’Dea.
“Together, Diedrich and Peet’s will create new growth
opportunities for Diedrich’s brands and further drive household
penetration of the K-Cup market,” said Diedrich chairman Paul
Heeschen. “As a result, this combination benefits shareholders of
both companies, customers, employees and our K-Cup business
partners. Our already strong K-Cup business will accelerate under
Peet’s in a way we could not achieve alone,” said Heeschen.
Upon completion, the transaction will provide Diedrich
shareholders with cash, as well as the opportunity for continued
ownership of an interest in the combined company through the stock
component of the purchase price. The acquisition is structured as a
two-step transaction consisting of an exchange offer for all of the
outstanding shares of Diedrich common stock followed by a merger of
a Peet’s subsidiary into Diedrich. For each share of Diedrich
common stock tendered and accepted in the exchange offer or
converted in the merger, Peet’s will pay a combination of $17.33 in
cash and a fraction of a share of Peet’s common stock having a
value (based on the trading price of Peet’s common stock over a
designated period prior to the completion of the exchange offer) of
approximately $8.67, but such fraction will not exceed 0.315 of a
share of Peet’s common stock. Outstanding warrants and options to
acquire Diedrich common stock will also be converted into the right
to receive a combination of cash and shares of Peet’s common stock.
Upon completion of the second-step merger, Diedrich will become a
wholly-owned subsidiary of Peet’s. Mr. Heeschen and other directors
and executive officers of Diedrich have signed stockholder
agreements in favor of Peet’s committing to tender into the
exchange offer shares of Diedrich common stock representing in
excess of 32% of the total outstanding common stock of
Diedrich.
The acquisition has been unanimously approved by the board of
directors of each company and is subject to regulatory approval and
certain other closing conditions. Peet’s will finance the
acquisition through a combination of cash on hand (at both
companies) and $140 million of committed debt financing. The
acquisition is expected to be dilutive to earnings in 2010 and
accretive thereafter. The exchange offer is currently expected to
close by end of the calendar year 2009.
Conference Call
Information
Peet’s will host a conference call beginning at 3:00 p.m. PT/
6:00 p.m. ET today, November 2, 2009, which can be accessed by
calling 1- 888- 339-3543. The call will simultaneously be webcast
at www.peets.com.
A replay of the teleconference will be available from 6:00 p.m.
PT / 9:00 p.m. ET on November 2, 2009 until 9:00 p.m. PT /12:00
a.m. ET on November 9, 2009, at 1-888-203-1112 or 1-719-457-0820,
using access code 9774911.
Additional Information and
Where to Find It
The exchange offer for the outstanding common stock of Diedrich
referred to in this press release has not yet commenced. This
announcement is neither an offer to purchase nor a solicitation of
an offer to sell shares of Diedrich. Diedrich shareholders are
urged to read the relevant exchange offer documents when they
become available because they will contain important information
that shareholders should consider before making any decision
regarding tendering their shares. At the time the offer is
commenced, Peet’s will file exchange offer materials with the U.S.
Securities and Exchange Commission and Diedrich will file a
Solicitation/Recommendation Statement with respect to the offer.
The exchange offer materials (including a Prospectus and certain
other offer documents) and the Solicitation/Recommendation
Statement will contain important information, which should be read
carefully before any decision is made with respect to the exchange
offer. The Prospectus and certain other offer documents, as well as
the Solicitation/Recommendation Statement, will be made available
to all shareholders of Diedrich at no expense to them. The exchange
offer materials and the Solicitation/Recommendation Statement will
be made available for free at the Commission’s web site at
www.sec.gov. Free copies of the Offer to Purchase, the related
Letter of Transmittal and certain other offering documents will be
made available by Peet’s by mail to Peet’s Coffee & Tea, Inc.,
1400 Park Avenue, Emeryville, CA 94608, attention: Investor
Relations, and free copies of the Solicitation/Recommendation
Statement will be made available by Diedrich by mail to Diedrich
Coffee, Inc., 28 Executive Park, Suite 200, Irvine, CA 92614,
attention: Investor Relations.
Interests of Certain Persons
in the Offer and the Merger
Peet’s will be, and certain other persons may be, soliciting
Diedrich shareholders to tender their shares into the exchange
offer. The directors and executive officers of Peet’s and the
directors and executive officers of Diedrich may be deemed to be
participants in Peet’s solicitation of Diedrich’s shareholders to
tender their shares into the exchange offer.
Investors and shareholders may obtain more detailed information
regarding the names, affiliations and interests of the directors
and officers of Peet’s and Diedrich in the exchange offer by
reading the Prospectus and certain other offer documents, as well
as the Solicitation/Recommendation Statement, when they become
available.
About Peet’s Coffee & Tea,
Inc.
Peet's Coffee & Tea, Inc., (NASDAQ: PEET), is the premier
specialty coffee and tea company in the United States. Founded in
1966 in Berkeley, California by Alfred Peet, an early tea authority
who became widely recognized as the grandfather of specialty coffee
in the U.S., Peet's offers superior quality coffees and teas in
multiple forms, by sourcing the best quality coffee beans and tea
leaves in the world, adhering to strict high quality and taste
standards, and controlling product quality though its unique direct
store delivery selling and merchandising system. Peet's is
committed to strategically growing its business through many
channels while maintaining the extraordinary quality of its coffees
and teas. For more information about Peet's Coffee & Tea, Inc.
visit www.peets.com.
About Diedrich
Coffee
With headquarters in Irvine, California, Diedrich Coffee
(NASDAQ: DDRX) specializes in sourcing, roasting and selling the
world's highest quality coffees. The company markets its three
leading brands of specialty coffees, Diedrich Coffee, Coffee People
and Gloria Jean's Coffees, through office coffee service
distributors, restaurants and specialty retailers, and via the
company's web stores. Diedrich Coffee is one of only four roasters
under license to produce K-Cups for Keurig Incorporated's
top-selling single-cup brewing system. For more information about
Diedrich Coffee, call 800-354-5282 or go to: www.diedrich.com,
www.coffeepeople.com or www.coffeeteastore.com.
Forward Looking Statements
This press release contains statements that are not based on
historical fact and are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include statements relating to
anticipated purchase, future dilution and accretion and the
anticipated closing timing of the transaction. Forward-looking
statements are based on management’s beliefs, as well as
assumptions made by and information currently available to
management, including financial and operational information, the
company’s stock price volatility, and current competitive
conditions. As a result, these statements are subject to various
risks and uncertainties. The company’s actual results could differ
materially from those set forth in forward-looking statements
depending on a variety of factors including, but not limited to,
general economic conditions, including the current recession and
its ongoing negative impact on consumer spending, the company’s
ability to implement its business strategy, attract and retain
customers, and obtain and expand its market presence in new
geographic regions; the availability and cost of high quality
Arabica coffee beans; consumers’ tastes and preferences; complaints
or claims by current, former or prospective employees or government
agencies; and competition in its market as well as other risk
factors as described more fully in the company’s filings with the
Securities and Exchange Commission, including its Annual Report on
Form 10-K for the year ended December 28, 2008. These factors may
not be exhaustive. The company operates in a continually changing
business environment, and new risks emerge from time to time. Any
forward-looking statements speak only as of the date of this press
release.
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