In accordance with the terms [image-nocss] of the prior agreement, on behalf of Diedrich, GMCR paid a termination fee of $8.517 million to Peet's in connection with such termination.
Under the terms of the merger agreement, GMCR will acquire all of the outstanding shares of Diedrich common stock for $35 per share in cash pursuant to a cash tender offer, with no financing and no due diligence contingencies. GMCR said it intends to fully finance this transaction through cash on hand and GMCR's existing bank lines of credit. The full terms and conditions of the GMCR offer will be contained in the Schedule TO, expected to be filed with the U.S. Securities & Exchange Commission (SEC) later this week. GMCR anticipates that this transaction will be neutral to slightly accretive within the first 12 months following the close, excluding one-time transaction expenses, and accretive thereafter.
The transaction is subject to customary closing conditions, including, among others, regulatory approvals. GMCR noted that it has thoroughly evaluated this transaction and is confident it can consummate the transaction promptly in early 2010. In that regard, the merger agreement includes a graduated reverse breakup fee structure such that the reverse breakup fee starts at $8.517 million for a termination prior to Feb. 15, 2010, and increases by $1 million in each subsequent 60-day period through June 15, 2010, in each case payable by GMCR to Diedrich in the "unlikely" event that regulatory approvals are not obtained under the terms and conditions of the merger agreement.
"We...look forward to realizing the substantial benefits of this transaction," said Lawrence J. Blanford, president and CEO of GMCR. "This combination further advances our objective of becoming a leader in the highly fragmented and competitive coffee and coffee maker businesses and provides significant growth opportunities for GMCR stakeholders. In particular, adding Diedrich's three strong brand platforms, which are highly complementary to GMCR's brands, as well as its manufacturing and distribution facilities in California will, upon completion of this transaction, enable us to more effectively reach consumers across North America and do so with an enhanced array of coffee choices."
Paul C. Heeschen, chairman of Diedrich, said, "This transaction maximizes value for our shareholders and is expected to bring new opportunities for both our employees and brands to grow as part of a stronger business platform."
Waterbury, Vt.-based GMCR's operations are managed through two business units. The Specialty Coffee business unit produces coffee, tea and hot cocoa from its family of brands, including Tully's Coffee, Green Mountain Coffee, Newman's Own Organics coffee and Timothy's World Coffee. The Keurig business unit is a leading manufacturer of gourmet single-cup brewing systems. K-Cup portion packs for Keurig Single-Cup Brewers are produced by a variety of licensed roasters, including Green Mountain Coffee, Tully's Coffee and Timothy's.
Irvine, Calif.-based Diedrich Coffee markets its three leading brands of specialty coffees, Diedrich Coffee, Coffee People and Gloria Jean's Coffees, through office coffee service distributors, restaurants and specialty retailers, and via the company's web stores. Diedrich Coffee is one of the few roasters under license to produce K-Cups for Keurig's single-cup brewing system.
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