(Green Mountain Coffee story updated with analyst commentary and stock price changes)
NEW YORK (TheStreet) -- Green Mountain Coffee Roasters (GMCR) said late Tuesday that Italian coffee roaster and seller Luigi Lavazza has agreed to purchase a $250 million stake in Green Mountain Coffee.
The purchase is equal to about 7% of Green Mountain's current outstanding shares and 7.5% below the 60-day volume weighted average price.
"We believe the agreement is opportunistic for Green Mountain given rising debt levels resulting from substantially increasing investment levels and recent acquisitions ... our view that the company will not generate positive free cash flow until at least fiscal year 2012 ... and Green Mountain's shares are trading above fair value, in our view," Stifel Nicolaus analyst Mark Astrachan wrote in a investor note.
Green Mountain and Lavazza also said that they're working on an agreement to cooperate on developing and manufacturing new single-serve espresso machines and single-serve espresso capsules designed for these machines.
The companies said that these co-developed machines and capsules probably won't arrive in the market before Green Mountain's fiscal year 2013.
Green Mountain said it plans to use the proceeds from the stock sale for corporate purposes, including financing the company's growth plans.
Green Mountain Stock Rating Report (GMCR) Rating and Financial Analysis
Green Mountain Coffee currently has a trailing 12-month revenue of $1.21 billion. Its specialty brands include Tully's Coffee, Green Mountain Coffee, Newman's Own Organics coffee, Timothy's World Coffee and Diedrich, Coffee People and Gloria Jeans.
The company's Keurig business unit manufacturers gourmet single-cup brewing systems.
Green Mountain Coffee stock is up 0.5% to $31.63 in midday trading after jumping 4.1% to $32.75 Wednesday morning -- even as the broader equities were trading in negative territory.
-- Reported by Andrea Tse in New York
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