Green Mountain Coffee Roasters to Acquire Diedrich Coffee
Diedrich Coffee terminated the Peet's merger agreement, has paid to Peet's the $8,517,000 termination fee required thereby and entered into the merger agreement with GMCR.
8 Dec 2009 --- Diedrich Coffee, Inc. has announced that it has entered into a merger agreement with Green Mountain Coffee Roasters, Inc. pursuant to which GMCR will acquire all of the outstanding shares of common stock of Diedrich Coffee for $35.00 in cash per share.
The Board of Directors of Diedrich Coffee had previously determined and announced that the GMCR $35 per share, all-cash offer was superior to the terms of the merger agreement with Peet's Coffee & Tea, Inc. (NASDAQ:PEET) and the exchange offer contemplated thereby, as amended by the revised proposal received from Peet's on November 30, 2009 (which revised proposal subsequently expired on December 1, 2009).
Peet's had until 5:00 p.m. Pacific Time on Monday, December 7, 2009 to negotiate with Diedrich Coffee to amend the Peet's merger agreement and the exchange offer contemplated thereby in a manner that the Board of Directors of Diedrich Coffee determined to be at least as favorable to Diedrich Coffee's stockholders as the transaction with GMCR. Peet's failed to submit a new proposal to Diedrich Coffee by such deadline. Accordingly, Diedrich Coffee terminated the Peet's merger agreement, has paid to Peet's the $8,517,000 termination fee required thereby and entered into the merger agreement with GMCR. The termination fee was paid to Peet's on behalf of Diedrich Coffee by GMCR.
As part of the Peet's merger agreement, Diedrich Coffee's Chairman Paul Heeschen and other directors and executive officers of Diedrich Coffee had contractually committed to tender certain shares they controlled into Peet's exchange offer. These commitments, representing in excess of 32% of the total outstanding common stock of Diedrich Coffee, automatically terminated upon termination of the Peet's merger agreement. Mr. Heeschen and the other directors and executive officers of Diedrich Coffee have now agreed to tender those same shares into GMCR's tender offer.
Notwithstanding the termination of the Peet's merger agreement and the director and officer stockholder agreements, Peet's has announced its intention to continue its exchange offer to acquire all of the outstanding shares of Diedrich Coffee for a combination of cash and a fraction of a share of Peet's common stock representing total consideration of $26.00 per share (or less under certain circumstances described in Peet's exchange offer).
In light of the determination of the Board of Directors of Diedrich Coffee that the $35.00 per share, all-cash GMCR transaction is superior to Peet's exchange offer, the Board of Directors of Diedrich Coffee recommends that stockholders do not tender their shares in Peet's exchange offer. Instead, the Board of Directors recommends that stockholders tender their shares in the tender offer that will be commenced by GMCR.
In addition to the superior consideration, the GMCR merger agreement provides for a reduction in the limitations and restrictions on Diedrich Coffee's ability to operate its business during the period prior to the completion of the transaction, as compared to the now-terminated Peet's merger agreement, as well as an increase in the time period during which Diedrich Coffee may remedy deficiencies relating to the satisfaction of certain conditions to the tender offer.
In addition, the GMCR merger agreement includes a graduated reverse termination fee such that, if the agreement is terminated by GMCR or Diedrich Coffee under certain circumstances, a termination fee in an amount between $8,517,000 and $11,517,000 (depending on the date of termination) would be payable to Diedrich Coffee.
Gibson, Dunn & Crutcher LLP is serving as the legal advisor to Diedrich Coffee and Houlihan, Lokey, Howard & Zukin Capital, Inc. is acting as financial advisor.
