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Peet’s to buy Diedrich Coffee for $213 million

November 2nd, 2009, 8:18 pm · 18 Comments · posted by Nancy Luna, Staff Writer

peetslogovia The Associated Press

Coffee chain retailer Peet’s Coffee & Tea Inc. said Monday it will buy wholesale roaster and distributor Diedrich Coffee Inc. for $213 million in a move to enter the rapidly growing single-cup coffee market.

Irvine-based Diedrich is mainly focused on the production and sale of K-Cups for Keurig Inc.’s single-cup brewing system through a license with Keurig. The deal also brings Peet’s such brands as Diedrich Coffee, Coffee People and the single-serve rights to the Gloria Jean’s coffee brand. And Peet’s will get Diedrich’s roasting and packaging facility capable of roasting and packaging unflavored and flavored coffees.

More than 90 percent of Diedrich Coffee’s business is producing and selling single serve K-cups through wholesale and online channels, Peet’s said during a conference call late Tuesday.

diedrichlogo.gif

Peet’s said it will pay for Diedrich with a combination of cash and $140 million in debt. The purchase, which is expected to close by the end of this year, will dilute 2010 earnings but should add to profit after that.

“The Diedrich acquisition represents another major strategic growth initiative for our consumer packaged coffee business, by entering and driving adoption of the single cup segment through Diedrichs high-growth K-Cup business,” said Peet’s President and CEO Patrick O’Dea, in a statement.

Diedrich Chairman Paul Heeschen and other directors and executive officers of the Irvine, Calif.-based company representing more than 32 percent of the company’s shares have agreed to tender their stock in the offer. The deal, which was unanimously approved by the boards of both companies, is subject to regulatory approval and certain other closing conditions.

Diedrich in September reported profit of $3 million on revenue of $20.1 million for its fiscal 2009 year ended in June. The company has forecast 2010 revenue of $90 million to $95 million. Last month, Peet’s raised its 2009 profit guidance after reporting third-quarter earnings of $2.5 million on revenue of $73.9 million.

Other Diedrich news:

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 18 Comments

  • Marketbuy says:
    November 2, 2009 at 8:33 pm

    Diedrich used to be a penny stock. Why did Peete’s waited this long to acquire Diedrich at a big premium? Totally unacceptable!!!

    Post Reply
  • builderguy says:
    November 2, 2009 at 9:07 pm

    Peets and Diedrich coffee would not be my first choice. Starbucks coffee is much more desireable to me.

    Post Reply
  • jason says:
    November 2, 2009 at 9:08 pm

    Fond memories of the Dietrich’s in Orange Circle. Haven’t been there once since that other company took it over.

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  • Judith says:
    November 2, 2009 at 9:50 pm

    I have fond memories of going to Dietrich’s in Tustin; across from the library. My church members of the church I used to go to, were in there a lot. Peet’s Coffee stinks. I can’t believe this. Dietrich’s should have bought out Peet’s, instead…

    Post Reply
    • jojo says:
      November 3, 2009 at 3:08 am

      Judith you might want to reconsider going back to church you know the one where “church members of the church I used to go to” there is a new coffee haus there and the coffee is extreme
      .
      Kean Coffee
      13681 Newport Avenue, Suite 14
      Tustin, CA 92780
      (714) 838-5326
      .
      .PS Martin Diedrichs newest coffee pad.

      http://keancoffee.com/

      Post Reply
    • Stephen Meade says:
      November 3, 2009 at 7:31 am

      It’s been turned into a Kean Coffee…owned and run by none other than Martin Diedrich.

      Post Reply
  • nicolette says:
    November 2, 2009 at 10:08 pm

    I used to talk to Dietrich on the phone every once in awhile to order bags of beans for a coffee house I used to work at way back when. Starbucks coffee is burnt, Peet’s coffee is only good when I’m desperate for a quick fix of caffeine, Dietrich’s was always good, & COFFEE BEAN BLOWS EVERYONE OVER BY A MILE! Coffee is coffee….what am I talking about…!?

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  • Edwoodca says:
    November 2, 2009 at 11:44 pm

    Starbucks is over-roasted. [aka: burnt]. Everyone has just acquired the “taste”. Much like diet sodas.

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  • mouse says:
    November 3, 2009 at 5:41 am

    Good news to all fans of the old Diedrichs…Martin Diedrich has opened Kean Coffee, with one location in Newport and a brand new beautiful store on Newport Blvd., in Tustin, where the Diedrich’s used to be.

    It’s just like you remember, only prettier. There’s a roaster on site and a master roaster in each store.

    Let Peet’s have the old relic and let the masses drink at Starbucks, we coffee snobs have a new home!!

    Post Reply
  • Dina says:
    November 3, 2009 at 6:45 am

    I want more Seattles Best please. They have really good coffee.

    Post Reply
  • Michelle M says:
    November 3, 2009 at 7:56 am

    I’ll stick with my Illy coffee at home. Although I was shocked at liking the coffee at 7-11 the other day; it was better than Starbucks!

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  • Craig R says:
    November 3, 2009 at 8:53 am

    K-cup coffee is terrible. It tastes stale and pithy. Probably because of the tiny Dixie cup size PLASTIC it sits in until you plop it in the Keurig machine to “brew” (aka quickly run hot water through the plastic K-cup) the coffee.

    I’m surprised that Peet’s would want to get into that market so badly. I suppose it WAS a growing segment about a year ago, but you see the Keurig machines on sale all the time and you can buy them just about anywhere now. Which is a good sign the tornado of growth is over.

    But I guess a company (Peet’s) that got taxpayer money to build a roasting plant in California shouldn’t be expected to know good business sense.

    Good for Diedrich. Bad for Peet’s and their shareholders.

    Post Reply
  • Judith says:
    November 3, 2009 at 11:07 am

    A big Thank you to those who told me about Kean’s Coffee in the spot where Dietrich’s was. Only I don’t live by there, anymore. I believe Der Wienerschnitzel carries Dietrich’s Coffee. Isn’t that true> I have one of those nearby me..

    Post Reply
  • hahaha says:
    November 3, 2009 at 3:56 pm

    All you Starbucks lovers baffle me! When a gas station makes better coffee than a place that specializes in the stuff,that’s not a good sign..I’ll say it again Coffee bean and Tea leaf is better than all these places combined! No burnt,overroasted crud in cup,take note Starbucks!

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  • The Bewildered Brit says:
    November 3, 2009 at 7:35 pm

    I remember the glory days when Diedrich was good. Then, in the year or so before they closed their stores the quality plummeted. They just became totally undrinkable.

    I’ve never been hugely impressed with the Coffee Bean and Tea Leaf, though perhaps their espresso drinks are decent. They always seem to make such watery coffee.

    Peets is the best of the bunch. I just hope they don’t start selling Diedrich’s terrible coffee!

    Post Reply

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