IRVINE, Calif. ( TheStreet) -- Diedrich Coffee ( DDRX) received a takeover offer of $35 a share in cash from Green Mountain Coffee Roasters ( GMCR), an offer Diedrich says is more "favorable" to its shareholders than a competing proposal from Peet's Coffee ( PEET).

Diedrich said Wednesday its board determined the proposal from Green Mountain is "superior" to Peet's offer to acquire Diedrich for $32.50 a share in cash and stock that was launched earlier this week.

Diedrich said Peet's now has until Dec. 7 to amend its current merger agreement that its board determines is "at least as favorable" to Diedrich's stockholders as the revised offer from Green Mountain. If Peet's fails to submit a new proposal that meets that criteria, Diedrich said it would pay Peet's a termination fee and enter an agreement with Green Mountain.

In a separate press release, Peet's CEO and President Patrick O'Dea said the terms of its offer for Diedrich remain superior " in light of the significant antitrust issues we think are associated with any proposal by (Green Mountain)."

"As provided for in our existing merger agreement with Diedrich, we will take the next few days to consider all our alternatives and, as always, take the action we deem to be in the best interests of Peet's shareholders," O'Dea said.

-- Reported by Joseph Woelfel in New York .

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