Diedrich Coffee board to consider Peet's revised cash-and-stock offer

By Lisa Kerner

Charlotte, N.C., Dec. 1 - Peet's Coffee & Tea, Inc. upped its offer for Diedrich Coffee, Inc. to a value of $32.50 per share in cash and stock, the companies announced on Tuesday.

The value is based on the $32.56-per-share closing price of Peet's stock on Monday.

Diedrich shareholders would receive 0.321 of a share of Peet's common stock plus cash in an amount between $21.265 and $22.87 for each Diedrich share, according to a Diedrich news release.

As long as Peet's volume-weighted average stock price over the five trading days prior to the completion of the exchange offer is between $30.00 and $35.00, the cash amount would be adjusted so that the value of the payment would be $32.50 per share. If the VWAP falls outside this range, the value per share received by Diedrich Coffee's stockholders would be less than or greater than $32.50.

Previously, Peet's had offered 0.321 of a share of its common stock plus $19.80 in cash for each Diedrich share.

Peet's submitted a revised offer on Monday after Green Mountain Coffee Roasters, Inc.'s proposal was determined to be superior by Diedrich's board of directors last week.

Diedrich said its board is considering Peet's revised offer as well as Green Mountain's offer.

According to a Peet's news release, the company is capable of closing a transaction with Diedrich by the end of the year, while Green Mountain planned to close its transaction in early 2010.

"In light of the antitrust challenges that Diedrich and GMCR acknowledge in their proposed agreement, along with the higher price, upside potential and greater protection against downside risk in our proposal, we strongly believe this new proposal to be clearly superior to the GMCR offer," Peet's president and chief executive officer Patrick O'Dea said in the release.

Green Mountain weighs in

Green Mountain president and CEO Lawrence J. Blanford, commenting on Peet's revised offer, said his company remains "firmly committed" to a strategic combination and is evaluating its next steps.

According to a Green Mountain news release, Peet's comments regarding a perceived timing advantage are "significantly exaggerated" and Peet's is "resorting to misrepresentations in the absence of being able to offer significantly more value to Diedrich shareholders."

As previously reported, Green Mountain upped its original offer for Diedrich by $2.00 per share to $32.00 per share in cash after Peet's raised its offer to $19.80 in cash plus 0.321 of a share of Peet's common stock for each Diedrich share.

The original Green Mountain offer was also deemed to be superior to Peet's original offer of $26.00 per share in cash and stock.

Based in Irvine, Calif., Diedrich is a specialty coffee roaster, wholesaler and retailer.

Green Mountain is a Waterbury, Vt.-based specialty coffee company.

Peet's is an Emeryville, Calif., specialty coffee and tea company.

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