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Should Starbucks Buy Peet's Coffee?

Zacks maintained a neutral rating on Peet's shares, and held a Zacks #3 Rank for Starbucks, indicating a short-term hold rating.

Starbucks

Still others caution the rumors remain just that, and an actual deal is still extremely speculative. Some consider that Starbucks would be more likely to consider acquiring a food and/or confections company as it looks to expand its operations beyond coffee.

Peet's retail stores may compete too closely with the in-store operations of Starbucks to make a merger financially viable, say some industry experts.


Sources told Financial Times that Peet's would be a better target for companies like Kraft Foods (KFT) or Nestle SA's (NSRGY).

Janney Capital Markets analyst Mitchell Pinheiro said a Peet's buyout by Starbucks would dilute the buyer's marketing bandwidth. "Why would you need another super-premium coffee brand, when I'd argue Starbucks is the number one super-premium coffee brand in the country, if not the world?" he asked.

He added that devoted Peet's customers, known as "Peetnicks," are typically anti-Starbucks and could become disillusioned with the brand if Starbucks were to take it over, choosing instead to spend their coffee dollars elsewhere.
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