FILED BY PEETS COFFEE & TEA, INC.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933
SUBJECT COMPANY: DIEDRICH COFFEE, INC.
COMMISSION FILE NO. 000-21203
Peets Coffee & Tea Enhances Proposal to Acquire Diedrich Coffee
Proposal is Superior in Value, Speed and Certainty of Closing in Light of Antitrust Risks Associated with Competing Offer
EMERYVILLE, Calif., Nov 30, 2009 Peets Coffee & Tea, Inc. (NASDAQ: PEET) announced today that it reinstated and enhanced its
previously expired proposal to acquire Diedrich Coffee, Inc. (NASDAQ: DDRX) for stock and cash valued at $32.50 based on Peets current stock price. Under its enhanced proposal, the stock component remains at 0.321 of a share of Peets
common stock, and the cash component will be an amount between $21.26 and $22.87 such that the value of the total consideration paid per Diedrich share equals $32.50 for all Peets common stock prices between $30.00 and $35.00. If Peets
volume-weighted average stock price over a designated period prior to the completion of the exchange offer is $35.00 or higher, the value of the offer would increase above $32.50 per share, and if Peets average stock price over that period is
$30.00 or lower, the value of the offer would decrease below $32.50. Peets stock closed today at $32.56 on the Nasdaq Global Select Market.
When Peets originally presented its November 22, 2009 proposal, Peets stock price was $38.00, which valued the proposal at $32.00 per Diedrich share. By November 24, 2009, following
the announcement of a competing bid for Diedrich by Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR), Peets proposal was valued at $30.35 per Diedrich share based on the $32.86 closing price of Peets common stock on November 24,
2009.
Peets presented the details of its modified proposal in a November 30, 2009 letter to the Diedrich board of directors.
Peets also reiterated its intention and capability to close the transaction before year-end 2009, while GMCR referred in its November 25, 2009 press release to a closing of its proposed transaction in early 2010. In addition, GMCRs
proposed definitive agreement with Diedrich allows it to extend the latest date by which the transaction must be completed to June 29, 2010 in the event of failure to obtain Hart-Scott-Rodino antitrust clearance. Peets accelerated the
corresponding date in its enhanced proposal from March 31, 2010 to February 15, 2010, with no extension for Hart-Scott-Rodino clearance. Peets views these timing differences to be a material factor in making Peets proposal
superior to GMCRs.
Under Peets enhanced proposal, as with its previous proposal, 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 Peets common stock.
In
light of the antitrust challenges that Diedrich and GMCR acknowledge in their proposed agreement, along with the higher price, upside potential and greater protection against downside risk in our proposal, we strongly believe this new proposal to be
clearly superior to the GMCR offer, said Patrick ODea, President and CEO of Peets.
Peets board of directors is being
advised on antitrust matters by Kevin Arquit of Simpson Thacher & Bartlett LLP. Mr. Arquit is widely recognized as a leading antitrust authority. Prior to joining Simpson Thacher, Mr. Arquit was Director of the Bureau of
Competition at the U.S. Federal Trade Commission.
We continue to believe that our acquisition of Diedrich would create significant
value for the stockholders of both companies, said Mr. ODea. We also remain convinced that Peets participation in the single serve K-Cup market would bring much-needed competition to that market that would benefit both
consumers and retail trade customers while also accelerating household penetration of the Keurig brewer system, added ODea.
Assuming Peets enhanced proposal is accepted, Peets expects the acquisition to be dilutive to earnings in 2010 and accretive thereafter. Peets expects fully-diluted earnings per share to be in the range of $0.70 to $0.80
in 2010 and
$2.00 to $2.10 in 2011. Peets plans to finance the cash portion of the acquisition through a combination of cash on hand (at both companies) and $175 million of committed debt financing
from Rabobank Nederland.
Cooley Godward Kronish LLP is acting as Peets legal advisor; Simpson Thacher & Bartlett LLP is acting
as legal advisor on antitrust matters. Morgan Stanley and Jesse Capital Management are serving as financial advisors.
Additional
Information and Where to Find It
This press release is neither an offer to purchase nor a solicitation of an offer to sell shares of
Diedrich. Peets has filed a registration statement on Form S-4 (containing a prospectus/offer to purchase and certain other offer documents) and a tender offer statement on Schedule TO with the SEC and Diedrich has filed a
solicitation/recommendation statement on Schedule 14D-9, all with respect to the Offer and the Merger (as defined in those documents). Diedrich stockholders are urged to read Peets prospectus/offer to purchase and the other offer documents
contained in the registration statement, and Diedrichs solicitation/recommendation statement, because they contain important information that stockholders should consider before making any decision regarding tendering their shares. The
registration statement (including the prospectus/offer to purchase and the other offer documents contained therein), the tender offer statement and the solicitation/recommendation statement contain important information, which should be read
carefully before any decision is made with respect to the Offer. The registration statement (including the prospectus/offer to purchase and certain other offer documents contained therein), as well as the tender offer statement and the
solicitation/recommendation statement, are available to all stockholders of Diedrich at no expense to them. The registration statement (including the prospectus/offer to purchase and other offer documents), the tender offer statement and the
solicitation/recommendation statement are available for free at the SECs website at www.sec.gov. Free copies of the prospectus and offer to purchase (and other offer documents) are also available from Peets by mail to Peets
Coffee & Tea, Inc., 1400 Park Avenue, Emeryville, CA 94608, attention: Investor Relations, and free copies of the Solicitation/Recommendation Statement are available from Diedrich by mail to Diedrich Coffee, Inc., 28 Executive Park, Suite
200, Irvine, CA 92614, attention: Investor Relations. In addition, the prospectus/offer to purchase (and other offer documents) may also be obtained free of charge by directing a request to the Information Agent for the offer, Laurel Hill Advisory
Group, LLC, 100 Wall Street, 22nd floor, New York, NY 10005 at 1-888-742-1305 (toll free). Continental Transfer & Trust Company is acting as depositary for the tender offer.
In addition to the foregoing materials filed with the SEC, Peets and Diedrich file annual, quarterly and special reports, proxy statements and other information with the SEC. Investors may read and
copy any reports, statements or other information filed by Peets or Diedrich at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference
room. Peets and Diedrichs filings with the SEC are also available to the public from commercial document-retrieval services and at the website maintained by the SEC at http://www.sec.gov.
Interests of Certain Persons in the Offer and the Merger
Peets will be, and certain other persons may be, soliciting Diedrich stockholders to tender their shares into the exchange offer. The directors and executive officers of Peets and the
directors and executive officers of Diedrich may be deemed to be participants in Peets solicitation of Diedrichs stockholders to tender their shares into the exchange offer.
Stockholders may obtain more detailed information regarding the names, affiliations and interests of the directors and officers of Peets and Diedrich in the exchange offer by reading the
prospectus/offer to purchase and certain other offer documents, as well as the solicitation/recommendation statement.
About Peets
Coffee & Tea, Inc.
Peets 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., Peets 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. Peets
is committed to strategically growing its business through many channels while maintaining the extraordinary quality of its coffees and teas. For more information about Peets Coffee & Tea, Inc. visit www.peets.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 the anticipated purchase price, sources of financing for the cash portion of the purchase price, future earnings per share, earnings dilution and accretion expected to result from the
acquisition and the anticipated closing timing of the transaction. Forward-looking statements are based on managements beliefs, as well as assumptions made by and information currently available to management, including financial and
operational information, the companys stock price volatility, and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. The companys actual results could differ materially from
those set forth in forward-looking statements depending on a variety of factors including, but not limited to, actions taken by competing bidders for Diedrich, fluctuations in the market price of Peets common stock, legal and regulatory
developments, general economic conditions, including the current recession and its ongoing negative impact on consumer spending, the companys 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 companys 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.
Contacts:
Sard Verbinnen & Co
Paul Kranhold/Diane Henry, 415-618-8750
Diedrich Coffee (MM) (NASDAQ:DDRX)
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