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UPDATE: Peet’s loses Diedrich, may up bid

EMERYVILLE Calif. Peet’s Coffee & Tea Inc. said Wednesday it would consider its alternatives after Diedrich Coffee Inc. deemed an all-cash buyout offer from Green Mountain Coffee Roasters Inc. to be superior to Peet’s cash and stock proposal.

Both Peet’s and Green Mountain have been courting Diedrich Coffee especially for its expertise in producing and selling specialty coffees for K-Cups used in Keurig Inc.’s popular single-cup brewing system and its roasting capabilities. Keurig is owned by Green Mountain. The acquirer also would pick up Diedrich’s Coffee and Coffee People brands, as well as control of the single-serve rights to the Gloria Jean’s coffee label.

After competing bids of $32 per share, or about $265 million — in cash from Green Mountain and in cash and stock from Peet’s, which actually equaled about $30.35 per share — Diedrich said Wednesday that Green Mountain’s proposal was superior.

Under terms of the original buyout agreement between Peet’s and Diedrich, signed earlier this month, Peet’s has until late Friday to negotiate with Diedrich Coffee and amend its offer.

“As provided for in our merger agreement with Diedrich, over the next several days we will consider all our alternatives and take the action we deem to be in the best interests of Peet’s shareholders,” Patrick O’Dea, president and CEO of Peet’s, said in a statement. “We will communicate further when it is appropriate.”

Analysts speculate that Peet’s will increase its offer. David Tarantino at Robert W. Baird & Co. said Peet’s could go as high as the mid-$30-per-share range and still realize meaningful value from the deal. Peet’s will be owed about $8 million in a termination fee if it does not prevail.

Contact Sarah E. Lockyer at [email protected].

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