Farmer Bros. Acquires Coffee Bean International

Price-point wholesaler buys specialty wholesaler

TORRANCE, Calif. -- Farmer Bros. Co. said it has acquired Coffee Bean International (CBI), a privately held roaster and wholesaler of specialty coffees.

Farmer Bros. paid approximately $22 million in cash under a stock purchase agreement with Coffee Bean Holding Co. Inc., the parent company of CBI. The final cash outlay will reflect various contingent adjustments. Farmer Bros. is planning additional investments in the CBI business, including improvements to the roasting plant in Portland, Ore., that will increase CBI's capacity.

CBI will continue to be based in Portland, and will operate as a separate company under its current leadership and management team. After the planned investments in its roasting plant, CBI will remain one of the few companies with the ability to achieve significant production volumes solely using artisan hand-roasting methods that maximize freshness and flavor, Farmer Bros. said.

Although there are few overlaps between the two companies, which compete for different customers and offer distinct products and services, CBI provides specialty coffees to customers such as coffee houses and private-label retailers. Farmer Bros. serves a variety of traditional coffee blends at different price points to restaurants such as independent operators and regional and franchise chains, as well as other institutional buyers such as hotels, convenience stores and hospitals. Farmer Bros., through its distribution network, competes on the quality and cost of its coffee, its personalized service and timely delivery and its wide range of related products, it said.

We believe CBI will help re-ignite the growth of Farmer Bros. by establishing an immediate presence in the fast-growing market for specialty coffee, said Rocky Laverty, president and COO of Farmer Bros. As CBI gains access to our capital strength and distribution capabilities, we believe it will be able to further capitalize on the opportunities for its specialty coffees and private-label programs.

Guenter Berger, chairman and CEO of Farmer Bros., said, CBI has a well-earned reputation for the highest-quality products and for the effectiveness of its marketing and brand management programs. We are thrilled that the people who built this excellent reputation will continue with us in Portland. CBI will benefit from the resources of a larger coffee company that appreciates and supports its vision of helping customers increase desire and appreciation for true artisan-roasted specialty coffees. In addition, we are looking forward to tapping its expertise and products in specialty coffee.

Patrick Criteser, president and CEO of CBI, added, With the support and resources of Farmer Bros., we will be better positioned to achieve our vision of becoming the world's preeminent wholesale specialty roaster.

The two companies began discussing the combination about three years ago. Torrance, Calif.-based Farmer Bros. has previously stated that it would consider strategic acquisitions of coffee and related businesses as it completed work on its new computer and information systems.

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