Green Mountain’s $265M-all-cash bid trumps Peet’s offer for Diedrich; Peet’s mulls options

Diedrich: Green Mountain’s $265M bid superior

IRVINE, Calif. — Green Mountain Coffee Roasters Inc. bested a rival Wednesday, after the board at Diedrich Coffee Inc. said its all-cash buyout offer trumped a dueling cash-and-stock bid.

Diedrich executives said Green Mountain’s $265 million offer, which amounts to $32 per share, was superior to an offer from Peet’s Coffee & Tea Inc.

Peet’s and Green Mountain have spent the past month bidding for Diedrich, each hoping to own the company’s license to produce popular single-serve coffee pods called K-Cups that are used in Keurig Inc.’s brewing system.

Green Mountain’s latest offer — its second — was submitted Tuesday. The coffee company, based in Waterbury, Vt., acquired another K-Cup licensee earlier this month for $157 million. If it succeeds in its quest to acquire Diedrich, it would control about 85 percent of K-Cup sales, an analyst said.

Green Mountain’s sweetened offer came just days after Peet’s raised its own offer for Diedrich.

On Sunday, Peet’s said it will pay $19.80 in cash and 0.321 of one share of Peet’s common stock for each share of Diedrich common stock.

But Wednesday morning, Diedrich’s board declared Green Mountain’s all-cash bid was a better deal for its shareholders since the value of Peet’s bid can fluctuate based on its own stock price. Based on Tuesday’s closing stock price, Diedrich valued the Peet’s offer at $30.35 per share.

In a statement, Green Mountain executives said they were “extremely pleased” by Diedrich’s decision and said the deal could be completed by early 2010.

“Our all-cash offer provides Diedrich shareholders with a substantial premium as well as greater value and greater certainty and speed of closing over Peet’s last proposal,” they said in a statement. “We remain firmly committed to this strategic combination and look forward to moving quickly in partnership with Diedrich to complete this transaction.”

Still, the fight may not be over.

“As provided for in our merger agreement with Diedrich, over the next several days we will consider all our alternatives and take the action we deem to be in the best interests of Peet’s shareholders,” Peet’s President and CEO Patrick O’Dea said in a statement.

Peet’s has until Monday afternoon to submit a still-sweetened offer.

Green Mountain shares fell 59 cents to $63.37 in midday trading Wednesday while Diedrich shares dipped 43 cents, or 1.3 percent, to $33.48. Peet’s shares climbed 64 cents, or 2 percent to $33.50.