Updated 10:23 p.m.
Diedrich Coffee said late tonight that it has entered into a merger agreement with Green Mountain Coffee Roasters, which has offered to buy the Irvine roaster in an all-cash deal valued at $290 million.
The announcement comes hours after Peet’s Coffee & Tea said it would not increase its bid to buy the company.
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Earlier story, below: Read the rest of this entry »
One of the country’s leading coffee roasters has raised its bid to buy Diedrich Coffee to $290 million, the Irvine company announced this morning.
The all-cash offer of $35 a share made by Green Mountain Coffee Roasters “continues to be a superior proposal” to the cash-and-stock offer made this week by Peet’s Coffee & Tea, Diedrich said today in a regulatory filing.
Peet’s, which initially offered to buy Diedrich in early November, has until 5 p.m. Monday to negotiate a new deal with Diedrich Coffee, the company said.
Peet's and Green Mountain want Diedrich's single-cup coffee business
Like Peet’s, Green Mountain is going after Diedrich for its single-cup coffee division. Green Mountain roasts its own coffee brands, but is also owns Keurig, a single-cup brewing system used at home and in the office. By snatching Diedrich from Peet’s, Green Mountain effectively derails Peet’s attempt to get a leg up in the rapidly growing single-cup coffee market.
Read full story: Diedrich bidding war continues
More Diedrich Coffee news:
After staying out of the limelight for a few years, it looks like Diedirch Coffee is once again the darling of the roasting industry.
The Irvine coffee roaster is being courted by two major brands: Peet’s Coffee & Tea and Green Mountain Coffee Roasters.
Peet’s, as you might recall, made a bid to buy Diedrich for $213 million in early November. Once complete, the cash and stock offer would have given Peet’s a leg up in the rapidly growing single-cup coffee market, where Diedrich has become a dominant player.
But over the past week, Diedrich has been wooed by another suitor: Green Mountain, a coffee roaster and developer of Keurig, a single-cup brewing system that has revolutionized the way consumers make coffee at home and in the office.
Peet's and Green Mountain seek Diedrich for its single-cup coffee
Peet’s and Green Mountain are now engaged in a bidding war over Diedrich, with the latest counter-offer coming from Peet’s.
The Northern California cafe chain is offering to buy Diedrich in a cash and stock deal valued at $32.50 per share, or $269 million. The revised bid beats a counter-offer made by Green Mountain last week.
The Vermont coffee company kicked off the Diedrich battle by offering to acquire Diedrich for $30 per share in cash, or $247 million. After a counter-offer by Peet’s, Green Mountain upped the ante again with a second all-cash offer of $265 million.
That led to Peet’s revised cash-and-stock offer made late Monday night.
In a statement released Tuesday, Green Mountain said its “all-cash offer continues to be the superior proposal of record. In contrast, Peet’s offer has a significant stock component and its shares have demonstrated significant volatility over the last 90 days.”
Diedrich investor representatives said the company has done a good job of positioning its roasting brand as one of the best in the country.
“That’s why you are seeing these offers,” said Cody Slach, a consultant with Diedrich’s Newport Beach-based investor relations firm Liolios Group Inc.
Diedrich officials will continue to look at “both bids and make a determination” soon, Slach said Tuesday morning.
More Diedrich Coffee news:
Two law firms representing Diedrich Coffee shareholders said late Tuesday that they are investigating possible violations tied to the Peet’s Coffee & Tea buyout offer.
“The investigation concerns the price to be paid by Peet’s to Diedrich Coffee shareholders and the process by which Diedrich Coffee’s Board of Directors is addressing the transaction,” according to a statement released Tuesday by Law Offices of Howard G. Smith in Pennsylvania.
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.
Irvine-based roaster Diedrich Coffee said Monday that it completed the $3.1 million sale of its Gloria Jean’s Coffees domestic operations to Praise International North America.
The deal, first announced in March, includes the sale of 102 franchised and company-operated Gloria Jean’s Coffees locations in 24 states. Orange County is home to three Gloria Jean cafes in Brea, Mission Viejo and Westminster.
The sale officially disconnects Diedrich from any retail cafe operations.
Dissolving its retail business started a few years ago when it sold its namesake coffee chain, Diedrich Coffee, and Coffee People brands to Starbucks in 2006. The $13.5 million sale effectively wiped out the Diedrich name in Orange County as the company opted to reposition itself as a wholesaler.
Ironically, many of those converted Diedrich-Starbucks cafes have since been shuttered by Starbucks.
Related stories:
What’s going on in the coffee world these days?
Coffee stocks are surging and one of the biggest stock gainers is Irvine-based Diedrich Coffee. Since selling its Gloria Jean cafe division in late March, Diedrich has seen its stock jump more than $9 a share. On March 30, the stock closed at $1.35, compared to $10.20 on Monday. Today, shares are hovering around $9.90.
“There is probably no better example of how crazy things have gotten with coffee stocks recently than Diedrich Coffee. This stock has gained well over a 1000% from where it broke out in March. The surge in both volume and price over the past few weeks has been quite remarkable, and it will be interesting to see how deep the pullback will be once it begins to correct,” according Forbes’ Investopedia.com
Other coffee stocks rallying over the past several weeks include Caribou Coffee, Starbucks and Peet’s.
My take: Ever since Diedrich Coffee sold its name-brand cafes to Starbucks in 2006, I’ve been waiting for the company to end its run as a publicly traded company. Every time I ask Diedrich about “going private,” officials get quiet. Obviously, they can’t speak to such things, as it would violate regulatory rules. So we’ll keep watching.
Related stories:
Just got word that another Diedrich Coffee-turned-Starbucks cafe is shutting down soon.
The Lake Forest Starbucks at 22621 Lake Forest Drive (at Muirlands) is closing May 10. That Starbucks is among 10 underperforming cafes that were targeted for closure last year by the Seattle chain. Of those, 7 have already closed. This week, Starbucks said it would close 12 more Orange County cafes. (Read: 2009 Starbucks Cafe Closure List)
My take: Irvine-based Diedrich Coffee sold several cafes to Starbucks in 2006 because the cafes were not making money. But, not even the popular Starbucks brand could turn profits for some of these stores. Last year, Starbucks closed cafes in Brea and Tustin that were once Diedrich Coffee units.
Related Stories:
Diedrich selling off Gloria Jean's
It’s official. Diedrich Coffee is out of the retail cafe business.
The Irvine-based coffee company said it plans to sell its last cafe chain, Gloria Jean’s Coffees, to Praise International North America for $3.1 million. The deal, which includes 102 domestic cafes in 24 states, effectively ends Diedrich Coffee’s legacy as a cafe retailer.
Since selling several Diedrich cafes to Starbucks a few years ago, the company has focused on building its wholesale coffee roasting business. The Gloria Jean sale, announced after the market closed Friday, is another move in that direction, Diedrich Chief executive J. Russell Phillips said during a phone interview Monday.
“We’re going to continue to stay the course of wholesale,” Phillips said. “This was certainly not a surprise to exit retail. It’s been our strategy.”
As previously reported, Starbucks plans to close 600 cafes across the nation. Ten of those cafes are in Orange County. So far, four of the 10 have already closed. (See list below)
The latest one to close will be an Anaheim Starbucks near Angel Stadium and the Anaheim train depot. The cafe, at 2420 E. Katella Ave. near the (57) Freeway closes Friday, Nov. 7, according to Starbucks officials and employees. The store opens at 5:30 a.m. and will shut its doors, for good, at 1 p.m., employees said.
Read more: Update on the 10 Starbucks cafes closing in Orange County
The recession is forcing many Orange County restaurants to shutter, and we're trying to track them all for you. Check out our O.C. Restaurant Closure List for the latest updates.
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