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Peet's Raises Offer to Buy Diedrich Coffee

EMERYVILLE, Calif. ( TheStreet) -- Peet's Coffee & Tea (PEET) raised its offer to $32.50 a share in cash and stock to buy Diedrich Coffee (DDRX).

Peet's offered to buy Diedrich last week for $32 a share, but was trumped by Green Mountain Coffee Roasters (GMCR - Get Report) which offered to buy Diedrich for the same share price, but in a bid that was all cash.

Diedrich executives said last week that Green Mountain's $265 million offer was superior to the offer from Peet's.

Peet's and Green Mountain have been vying for Diedrich over the past month, each hoping to own the company's license to produce popular single-serve coffee pods called K-Cups that are used in Keurig's brewing system.

"We continue to believe that our acquisition of Diedrich would create significant value for the stockholders of both companies," said Peet's President Patrick O'Dea, in a statement. "We also remain convinced that Peet's participation in the single serve K-Cup market would bring much-needed competition to that market that would benefit both consumers and retail trade customers while also accelerating household penetration of the Keurig brewer system."

Green Mountain acquired another K-Cup licensee last month. If it was to succeed in its quest to acquire Diedrich, it would control about 85% of K-Cup sales.

Shares of Diedrich closed Monday at $33.12, while Peet's shares finished at $32.56.

-- Reported by Joseph Woelfel in New York .

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Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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