The Associated Press May 12, 2010
Businessweek.com
WATERBURY, Vt.
Green Mountain Coffee Roasters Inc. has completed its $300 million acquisition of Diedrich Coffee Inc., one of four roasters licensed to produce K-Cups for the top-selling single-serve Keurig brewing system.
The K-Cup brand is owned by Green Mountain, which is based in Waterbury.
Green Mountain said Tuesday it paid $35 per share in cash for each share of common stock. As of midnight Monday, nearly 5.5 million shares had been tendered -- roughly 95 percent of the company's outstanding shares.
Diedrich is now a wholly owned subsidiary of Green Mountain and will be part of its specialty coffee division.
Shares of Green Mountain, based in Waterbury, Vt., closed at $76.51 on Tuesday. Diedrich Coffee shares will no longer be traded on the NASDAQ Stock Exchange.
Wednesday, June 2, 2010
Green Mountain Coffee Acquires Diedrich Coffee
Green Mountain Coffee Roasters acquired Diedrich Coffee Inc. in March after several months investigation by the Federal Trade Commission (FTC). The federal regulators scrutinized the impact that the sale of Diedrich Coffee would have on the single serve coffee for Keurig coffee makers.
Green Mountain purchased Keurig Inc in 2006 and has been working to consolidate production and Keurig K-Cup sales ever since. Tully's Coffee Corp. wholesale division was bought early in 2009, followed by Timothy's Coffees of the World Inc. in November of 2009. Shortly thereafter, in December, the deal for Diedrich Coffee Inc was agreed upon. Green Mountain successfully shut out the attempts of Peets Coffee to purchase Diedrich.
The size of the Diedrich purchase triggered an automatic federal review under the Hart-Scott Antitrust Improvement Act of 1976.
The Diedrich Coffee buyout comprised the largest acquisition of a licensee by Green Mountain, whose earlier transactions had apparently not been large enough to trigger a Hart-Scott-Rodino filing. The review by the FTC was quite extensive, spurred on by political pressure by some of Green Mountain competitors.
Keurig coffee makers and K-Cups are successfully changing how people are brewing coffee. There have been single cup brewers before the Keurig but none of them have drastically changed the coffee market like the Keurig brewer has. Many in the coffee industry see the growth of the K-Cup market as a game changer for coffee roasters that have captured consumers with gourmet coffee beans for more than two decades.
The parents of baby boomer drank percolated their coffee. The disco era brought gourmet coffee beans that we ground and dripped to make our pot of coffee. Now, in the 21st century, we brew one cup of coffee at a time for the freshest flavor without throwing out the rest of the pot.
The Diedrich's K-Cup market actually kept their business alive when they attempted to challenge the Starbucks coffee shop idea with their own coffee houses. In 2006, Diedrich sold 40 of their coffee houses to Starbucks Corp. In 2009 sold the remaining Gloria Jeans's Gourmet Coffee & Teas in the U.S. to Praise International North America, an affiliate of the Australian group that bought the internationaal Gloria Jean's a few years before.
Diedrich's was originally licensed in 2000 by Keurig Inc. to produce the K-Cups prior to Keurig's purchase by Green Mountain. Diedrich K-Cup market didn't produce the profitability they realized 6 years later, when K-Cups became a significant part of their business.
Green Mountain's business saavy put Keurig coffee makers in retail markets like Wal-Mart, Macy's, Bed Bath & Beyond and Target. Diedrich K-Cup sales multiplied and their stock soared in 2009, ending up about 10,000%.
In late fall of 2009, Peet's Coffee & Tea Inc. first offered $213 million in cash and stock for Diedrich. Thus began the bidding war that ended with Green Mountain's acquisition.
Peet's coffee aggressively sought to purchase Diedrich because of the success of the K-Cup and the change in the coffee industry. They were looking for an opportunity to enter the single cup brewing market with the proven successful K-Cups. When Peet's divulged it's bid to the public in November, Diedrich was able to seek bids from other suitors; enter Green Mountain.
The month long bidding war culminated in the winning bid by Green Mountain and the several month investigation by the FTC. Recently, Green Mountain's acquistion of Diedrich Coffee Inc. was completed with the blessing of the Federal Trade Commission.
Green Mountain purchased Keurig Inc in 2006 and has been working to consolidate production and Keurig K-Cup sales ever since. Tully's Coffee Corp. wholesale division was bought early in 2009, followed by Timothy's Coffees of the World Inc. in November of 2009. Shortly thereafter, in December, the deal for Diedrich Coffee Inc was agreed upon. Green Mountain successfully shut out the attempts of Peets Coffee to purchase Diedrich.
The size of the Diedrich purchase triggered an automatic federal review under the Hart-Scott Antitrust Improvement Act of 1976.
The Diedrich Coffee buyout comprised the largest acquisition of a licensee by Green Mountain, whose earlier transactions had apparently not been large enough to trigger a Hart-Scott-Rodino filing. The review by the FTC was quite extensive, spurred on by political pressure by some of Green Mountain competitors.
Keurig coffee makers and K-Cups are successfully changing how people are brewing coffee. There have been single cup brewers before the Keurig but none of them have drastically changed the coffee market like the Keurig brewer has. Many in the coffee industry see the growth of the K-Cup market as a game changer for coffee roasters that have captured consumers with gourmet coffee beans for more than two decades.
The parents of baby boomer drank percolated their coffee. The disco era brought gourmet coffee beans that we ground and dripped to make our pot of coffee. Now, in the 21st century, we brew one cup of coffee at a time for the freshest flavor without throwing out the rest of the pot.
The Diedrich's K-Cup market actually kept their business alive when they attempted to challenge the Starbucks coffee shop idea with their own coffee houses. In 2006, Diedrich sold 40 of their coffee houses to Starbucks Corp. In 2009 sold the remaining Gloria Jeans's Gourmet Coffee & Teas in the U.S. to Praise International North America, an affiliate of the Australian group that bought the internationaal Gloria Jean's a few years before.
Diedrich's was originally licensed in 2000 by Keurig Inc. to produce the K-Cups prior to Keurig's purchase by Green Mountain. Diedrich K-Cup market didn't produce the profitability they realized 6 years later, when K-Cups became a significant part of their business.
Green Mountain's business saavy put Keurig coffee makers in retail markets like Wal-Mart, Macy's, Bed Bath & Beyond and Target. Diedrich K-Cup sales multiplied and their stock soared in 2009, ending up about 10,000%.
In late fall of 2009, Peet's Coffee & Tea Inc. first offered $213 million in cash and stock for Diedrich. Thus began the bidding war that ended with Green Mountain's acquisition.
Peet's coffee aggressively sought to purchase Diedrich because of the success of the K-Cup and the change in the coffee industry. They were looking for an opportunity to enter the single cup brewing market with the proven successful K-Cups. When Peet's divulged it's bid to the public in November, Diedrich was able to seek bids from other suitors; enter Green Mountain.
The month long bidding war culminated in the winning bid by Green Mountain and the several month investigation by the FTC. Recently, Green Mountain's acquistion of Diedrich Coffee Inc. was completed with the blessing of the Federal Trade Commission.
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