Green Mountain Sheds Business - Analyst Blog
August 30 2011 - 12:30PM
Zacks
Green Mountain Coffee Roasters Inc. (GMCR)
announced that it is selling its US Van Houtte business to Aramark
Refreshment Services LLC for about $145 million.
The Van Houtte business, also known as Filterfresh Business,
roasts and markets gourmet coffee for home and office consumption.
It distributes its products through Van Houtte’s direct-to-store
delivery and coffee services networks in Canada and the U.S.
Van Houtte’s Canadian brands include Van Houtte, Brulerie St.
Denis, Les Cafés Orient Express Coffee and Brulerie Mont Royal. The
company also produces K-Cup portion packs for the Keurig Single-Cup
Brewing System under the Van Houtte, Bigelow and Wolfgang Puck
K-Cup brands.
Green Mountain had taken over the Filterfresh business from LJVH
Holdings Inc for $905 million in December, 2010. However, soon
after the acquisition Green Mountain decided to divest its Van
Houtte’s US business. Popular as Filterfresh, the unit serves more
than 71,000 offices in most major North American cities, and
overlaps with Green Mountain's existing network of independent
Keurig distributors in the U.S. Proceeds from the sale would be
used to repay Green Mountain’s debt.
The company continued to carry on the business from Van Houtte’s
headquarters in Montreal, Quebec. Green Mountain had moved
ahead with the acquisition with a desire to expand its business in
Canada and and own the wide range of brands in Van Houtte’s
portfolio.
Green Mountain produces coffee, tea and hot chocolate under
various brands, including its namesake as well as Tully's Coffee,
and Newman's Own Organics coffee. It also manufactures K-Cup
portion packs.
While Green Mountain’s sound position in a prospering industry
and strategic acquisitions encourage us immensely, coffee’s
vulnerability to highly volatile global prices and presence of
tough competitors like Peet's Coffee & Tea
Inc. (PEET) and Starbucks Corporation
(SBUX) are a worry.
Currently, we prefer to rate the stock as Neutral. Green
Mountain holds a Zacks #1 Rank, which translates into a short-term
Strong Buy rating.
GREEN MTN COFFE (GMCR): Free Stock Analysis Report
PEETS COFFE&TEA (PEET): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
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