--Private-investment group Joh. A. Benckiser agrees to acquire
Peet's
--Deal takes it private following a sharp drop in share
price
--Shares surge above deal's $73.50-per-share price in recent
trade
(Adds share movement, further details.)
By Joan E. Solsman and Saabira Chaudhuri
Peet's Coffee & Tea Inc. (PEET) agreed to be taken private
in a $1 billion cash acquisition by private German investment group
Joh. A. Benckiser, news that jolted shares to their highest level
in months.
Shares in the struggling coffee seller surged 29% to $73.85
after being halted ahead of the news. The trade puts the stock at
its highest level since it started tumbling on a first-quarter
profit miss at the beginning of May, exacerbated by high coffee
costs. In late March, shares had hit an all-time high of
$77.60.
The movement also elevates the share price above the
$73.50-a-share level of the Joh. A. Benckiser's deal, which
indicates investors are speculating that another suitor may emerge
to set off a bidding war.
Peet's, which is focused on the bagged-coffee segment, has
struggled with higher coffee-bean costs in recent months. The
coffee retailer lacks pricing power at grocery stores as it already
sells at a premium to other brands, even Starbucks Corp. (SBUX)
products. However, prices have begun to ease recently, making the
stock and Peet's business prospects more attractive.
Peet's is also hindered by not participating in the fast-growing
single-serve market, which is grabbing market share.
Under the deal, Peet's will continue to be operated by the
company's current management and employees and will remain based in
the San Francisco Bay area, with its home office in Emeryville,
Calif., and its roast-to-order facility in Alameda, Calif. The deal
is expected to close in about three months.
Peet's Chief Executive Patrick O'Dea said the company's
commitment to high-quality coffees and teas will continue to be its
guiding purpose. Chairman Jean-Michel Valette said JAB's interest
reflected the power of Peet's brand.
"We are pleased that JAB recognizes this and that Peet's
existing shareholders will be rewarded with significant value," Mr.
Valette said in a release.
Joh. A. Benckiser is the investment vehicle for Germany's
Reimann family, which, among other holdings, owns perfume maker
Coty Inc. That business is planning a U.S. initial public offering
after earlier failing in its bid to acquire struggling Avon
Products Inc. (AVP). Joh. A. Benckiser also owns a large stake in
Reckitt Benckiser Group PLC (RB.LN, RBGPY), a household-products
powerhouse whose brands include Lysol, Woolite and French's
mustard.
Joh. A. Benckiser is focused on long-term investments in the
broader consumer-goods category. The group's portfolio also
includes a minority investment in D.E Master Blenders 1753. The
group also owns Labelux Group GmBH, a luxury-goods company with
brands such as Jimmy Choo, leather-accessories brand Bally and
Belstaff.
In addition to Joh. A. Benckiser, Chicago-based merchant bank
BDT Capital is participating in the transaction as an adviser and
minority investor.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com and
Joan Solsman at joan.solsman@dowjones.com.
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