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 Will Not Enhance Latest Proposal and Will Leave in Place Existing Offer to Acquire Diedrich for $26.00
Per Share
Underscores Speed and Greater Certainty of Closing
EMERYVILLE, Calif., Dec 07, 2009 Peets Coffee & Tea, Inc. (NASDAQ: PEET) announced today that in response to Diedrich Coffee,
Inc.s (NASDAQ: DDRX) determination that the most recent proposal from Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) to acquire Diedrich was superior to Peets most recent proposal, Peets will not further enhance its proposal.
Peets further announced that it will leave in place its exchange offer to acquire Diedrich for a combination of cash and stock valued at $26.00 per share.
We believe that a combination of Peets 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 ODea, President and CEO of Peets. 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 GMCRs competing proposal. In the meantime, while GMCRs 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 ODea.
Under the terms of GMCRs proposal, GMCR and Diedrich will be required to file for Hart-Scott-Rodino antitrust
clearance, a regulatory process that GMCR did not undergo when it acquired Tullys Coffee Corporations wholesale business and Timothys Coffees of the World, Inc., two of the three other Keurig licensees with whom it previously
competed.
On December 1, 2009, the board of directors of Diedrich informed Peets that it had determined that a proposal from GMCR
to acquire Diedrich for $35.00 per share in cash was superior to Peets most recent proposal valued at $32.50 per share in cash and Peets stock. As publicly announced by Diedrich, Peets $32.50 per share proposal has expired, leaving
in place its original $26.00 per share offer, and Peets currently has until 5:00 p.m. Pacific Time today to respond to the GMCR proposal. As a result of Peets decision not to further enhance its proposal, Diedrich will be entitled to
terminate the merger agreement after 5:00 p.m. Pacific Time today, subject to compliance with the requirements of the merger agreement between Peets and Diedrich.
Under the terms of Peets pending exchange offer, which will continue even if Diedrich terminates the merger agreement, for each share of Diedrich common stock tendered and accepted in the exchange
offer or converted in the succeeding merger, Peets will pay a combination of $17.33 in cash and a fraction of a share of Peets common stock having a value (based on the trading price of Peets common stock over a designated period
prior to the completion of the exchange offer) of approximately $8.67, such fraction not to exceed 0.315 of a share of Peets common stock. Based on the closing price of Peets common stock on December 7, 2009, this represents a value
of $26.00 per Diedrich share. Following any termination of Peets merger agreement with Diedrich, neither of the financing arrangements previously disclosed by Peets will remain in effect. Peets is negotiating a revised financing
arrangement for the pending exchange offer and expects to announce the completion of that negotiation in the near future.
Peets
exchange offer and withdrawal rights are scheduled to expire at 12:00 midnight Eastern Time on December 15, 2009 unless extended. Peets currently intends to exercise its right to extend the exchange offer at that time.
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, as well as
amendments to the foregoing, and Diedrich has filed a solicitation/recommendation statement on Schedule 14D-9, together with amendments, all with respect to the Offer and the Merger (as defined in those documents). Diedrich shareholders 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 shareholders 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 shareholders 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
www.sec.gov
.
Interests of Certain Persons in the Offer and the Merger
Peets 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 Peets and the directors and executive officers of Diedrich may be deemed to be participants in Peets solicitation of Diedrichs shareholders to tender their shares into the exchange offer.
Shareholders 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, closing timing, financing and benefits 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.
Sard Verbinnen & Co
Paul Kranhold/Diane Henry, 415-618-8750
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