Peet's Coffee Buying Diedrich Coffee For $213M

EMERYVILLE, Calif. (AP) — 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.

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.

Peet's will pay $26 per share in cash and stock for Diedrich, representing a nearly 28 percent premium to the stock's Monday close of $20.36. For each Diedrich share, Peet's will pay $17.33 in cash and a fraction of a Peet's share valued at about $8.67.

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.