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The past month has been nirvana for the shareholders of Diedrich Coffee (DDRX ), at least for those who held on. The company was the object of a fierce bidding war from Green Mountain Coffee Roasters (GMCR) and Peet's Coffee (PEET).
But today, the hostilities are over as Green Mountain finally won the battle. The company has agreed to pay $35 per share for Diedrich (the bidding started at $26). Keep in mind that -- about a year ago -- the shares were trading at 21 cents.
In all, the transaction comes to a valuation of $290 million (there is also a $8.5 million termination fee payable to Peet's). It's a hefty price, given that Diedrich generates $60+ million in sales per year.
Green Mountain is looking to ramp up growth with Diedrich's footprint print in the single-serve coffee market. The centerpiece is the Keurig machine, which has surged in revenues over the past couple years.
Interestingly enough, Green Mountain owns the Keurig technology. So, why not get as much of the market as possible? In fact, Green Mountain has been snapping up other Keurig licensees.
Although, it looks like Peet's hasn't given up entirely and thinks there may be antitrust problems. However, in light of the diversity of the coffee market, this would probably be an uphill battle.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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