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Shareholder Rights Law Firm Johnson & Weaver, LLP is investigating whether members of the board of directors of Peet's Coffee & Tea, Inc. (
PEET) breached their fiduciary duties and violated other laws in connection with their efforts to sell the company to a German financial conglomerate.
On July 23, 2012, Peet’s announced that it will be acquired by Joh. A. Benckiser, the investment vehicle for Germany’s Reimann family, for $73.50 per share. Peet’s also emphasized that the agreement was “unanimously approved by the Peet's Board of Directors” and represents a premium of approximately 29% over Peet's closing stock price on July 20, 2012. “This announcement uses fuzzy math,” said Frank Johnson of Johnson & Weaver, LLP. Johnson added that “before a recent downturn, the stock traded at or above $70 for much of 2012, closing as high as $76.82 less than three months ago.” In addition, several analysts have set target prices for Peet's between $80 and $95 per share based on recent growth and positive results. Thus, while the Benckiser offer price may seem attractive when compared to a closing price just days before, an analysis of Peet’s long-term performance raises questions as to whether this deal is an attempt to buy a solidly profitable company on the cheap during a temporary period of decline.
According to Mitchell Pinheiro of Janney Capital Markets, “We thought Peet’s would make more sense for a larger packaged food company that would have more marketing muscle, distribution power, and cost synergies, as opposed to being part of a private equity portfolio.” In other words, had Peet’s Board of Directors elected to merge the Company with another strong, logically synergistic publicly traded company, Peet’s shareholders could have maintained their equity interest and realized the “growth potential” from such a merger. Instead, Peet’s Board agreed to a “going-private” deal that cashes out shareholders at a discount with no opportunity to reap the benefits of any future growth. Interestingly, Peet’s Board required as a condition of the going-private deal that “[t]he current management and employees will remain with the company, and its headquarters will stay in Emeryville, CA.” Peet’s Coffee Acquired in Billion-Dollar Deal, MSNBC Marketday, July 23, 2012.