Peet’s Coffee & Tea bows out of bidding for Diedrich Coffee
Green Mountain Coffee Roasters Inc. looks to have won a bidding war to buy Diedrich Coffee Inc., the Irvine coffee roaster.
Rival bidder Peet’s Coffee & Tea Inc. said Monday that it would not raise its bid for Diedrich. That leaves Green Mountain’s all-cash offer of $290 million, or $35 a share. Just a year ago, Diedrich shares sold for 30 cents.
Peet’s started the bidding war last month with a $213-million stock and cash offer. It made its latest announcement after the stock market closed Monday.
Diedrich, has said it considers the Green Mountain offer a better deal but is not expected to comment on the bidding until before the stock market opens today. Diedrich shares fell $1.06 to $34.09 in after-hours trading.
The battle for Diedrich was essentially a fight for control of the Irvine company’s license to make the single-use ground coffee pods that fit into the popular Keurig single-cup brewers sold in department stores and household goods suppliers such as Target and Bed, Bath & Beyond.
Green Mountain of Waterbury, Vt., owns the Keurig brewing system patent and has been buying the handful of roasters that hold licenses to make the “K-Cup” cartridges for Keurig-style coffee makers.
Coffee sold in such pods has a much higher profit margin than other coffee. Consumers pay $20 to $24 a pound for the single-serving coffee cartridges, about double what they pay for specialty coffee in the traditional bag form, according to Peet’s.
Diedrich, a Southern California coffee company since the 1970s, is one of the last two license holders that have not been acquired by Green Mountain. The other is Van Houtte of Montreal.
Peet’s, the Emeryville, Calif., roaster with a large chain of coffeehouses, wanted Diedrich’s license to make the cartridges, believing it would provide an entry into the home and office single-cup brewing market.
Peet’s had until 5 p.m. Monday to raise its bid but decided not to go another round.