Caribou to go private in $340M buyout

Caribou to go private in $340M buyout

German firm Joh. A. Benckiser will pay a 30-percent premium for the coffee chain

Caribou Coffee, the nation’s second-largest coffeehouse chain, will go private in a $340 million acquisition by international holding company Joh. A. Benckiser Group, the companies announced Monday.

An affiliate of Joh. A. Benckiser will pay $16 per share for all outstanding shares of Caribou Coffee’s common stock, which represents approximately a 30-percent premium over the $12.32 closing share price from Friday.

Caribou operates 408 coffeehouses and franchises another 202 locations. Following the acquisition, the brand's management team will remain in place and headquarters will remain in Minneapolis.

Joh. A. Benckiser is based in Ludwigshafen, Germany, and invests primarily in luxury brands in high-growth industries. The company holds a majority stake in Peet’s Coffee & Tea Inc. and a minority stake in Amsterdam-based D. E. Master Blenders 1753 N.V., another coffee and tea company. Joh. A. Benckiser also owns leather-goods company Labelux, which manages brands such as Jimmy Choo, Bally and Belstaff.

Chicago-based BDT Capital Partners is a minority investor in the transaction.

“Caribou Coffee is a great company, with dedicated people, world-class customer service, exceptionally high-quality coffeehouse beverages and food, and a state-of-the-art roasting facility,” Gary Graves, a chairman of Joh. A. Benckiser, said in a statement. “The employees of Caribou should feel very proud of all they’ve been able to accomplish over the years, and I look forward to continued success in Caribou’s future.”

In a statement, Caribou chief executive Mike Tattersfield, a 2012 recipient of Nation’s Restaurant News’ Golden Chain award [6], said the brand anticipates “the next chapter in Caribou’s journey will be filled with tremendous opportunities to grow this brand with new ownership.”

David Tarantino, securities analyst for Robert W. Baird & Co., wrote in a research note that the sale value of about $340 million represents about 11 times Caribou’s expected earnings before interest, taxes, depreciation and amortization, which he noted accounts for the chain’s long-term growth potential as well as its recent “choppy” financial performance. He was not surprised that somebody agreed to take Caribou private.

“As indicated in recent research notes, we had considered Caribou a logical buyout target, given the company’s attractive business model, clean balance sheet and modest valuation,” Tarantino wrote. “That said, with the proposed transaction valuing Caribou above the average for recent restaurant buyouts, we suspect that a competing bid for Caribou is unlikely, especially when considering the mixed financial performance the company has exhibited year-to-date.”

Despite positive same-store sales growth in each of its first three quarters of fiscal 2012, Caribou Coffee’s quarterly net income registered positive, yet lower than the year-earlier results for the first three periods of fiscal 2011. Revenue growth has decelerated this year, including a 5.2-percent decrease in the Sept. 30-ended third quarter, due largely to declining sales in its consumer packaged-goods division resulting from lower sales of single-serving K-Cups [3].

Caribou Coffee operates or franchises a total of 610 locations in 22 states, the District of Columbia and 10 international markets. The brand celebrated its 20th anniversary last Friday, Dec. 14.

Contact Mark Brandau at [email protected] [7].
Follow him on Twitter: @Mark_from_NRN [8]