Peet’s Billion Dollar Deal Challenged


Dozens of law firms, representing affronted stockholders, are attempting to derail a $1 billion deal by German conglomerate to acquire Peet’s Coffee & Tea.

The deal, with Germany’s Joh. A. Benckiser, was unanimously approved by the coffee-maker’s board. It is expected to close before year end.

The 190-store San Francisco Bay-Area coffee chain, that helped launch Starbucks has been a takeover target for several years largely due to its relatively small scale in the grocery channel and the fact it missed an opportunity to supply single-serve coffee.

“We are very excited about this next chapter in Peet's rich history,” said Peet’s President and CEO Patrick O'Dea. “Over many years we've demonstrated an unyielding commitment to craft coffees and teas of uncompromised quality. This commitment is what has distinguished the Peet's brand among all others and will continue to guide us as we go forward.”

Speculation generally assumed a sale to Starbucks but Benckisher, a company that earned $14.6 billion last year, offered $73.50 a share Friday to take the company private. The offer was 29 percent above the closing share price of $57.16. Peet’s reported $379 million in 2011 revenue, up 11 percent.

Benckiser is the investment vehicle for Germany's Reimann family, which owns $4 billion French perfume maker Coty Inc. The company also has a minority share of newly re-christened D.E. Master Blenders 1753 a spinoff of Sara Lee that is now one of the largest coffee companies in the world. It also owns a large stake in Reckitt Benckiser, a household-products powerhouse whose brands include Lysol, Woolite and French's mustard.

Benckiser is best known for its perfume and beauty holdings. After failing to acquire struggling Avon Products Inc. with a $10.7 billion offer, Coty announced plans for a U.S. initial public offering.

Several law firms cried foul this week and are seeking clients who own stock in the company.

Weiss & Lurie, a national class action and shareholder rights law firm with offices in New York City and Los Angeles, announced it is investigating possible breaches of fiduciary duty and other violations of law by Peet’s Board of Directors. “If the deal is consummated, Peet's will become privately owned, and continue to be operated by the Company's current management team. Therefore, while Company executives are able to retain their positions and benefit from a liquidity event, Peet's shareholders will be denied the opportunity to benefit from the Company's growth,” according to a release. Similar actions were threatened by Faruqi & Faruqi, LLP, and by Levi & Korsinsky, LLP in New York along with Los Angeles-based Glancy Binkow & Goldberg, shareholder rights law firm Johnson & Weaver and The Lin Law Firm. Each intends to press for a higher sale price.

Several analysts following Peet's had set the price target of its stock at or above $80 per share, with a high target of $95 per share. Peet's stock hit an all-time high of $77.60 per share on March 28, 2012 and generally traded near or above the $73.50 per share offer price throughout April 2012.

Alfred Peet sold Starbucks the distinctive dark roast beans that launched the Seattle roaster. The two companies, which compete on grocery shelves nationally were in talks to boost both brands’ presence in grocery stores, according to the Los Angeles Times.

Peet’s was founded in 1966 in Berkeley. It is headquartered in Emeryville with roasting facility in Alameda. Operations will stay based a few minutes away in Emeryville; the current management team and employees will continue to run the company, according to a report in the Wall Street Journal.

In 2009, Peet’s lost a bidding war to buy Irvine coffee roaster Diedrich Coffee Inc. Green Mountain Coffee Roasters Inc. ended up picking up the company for $290 million and Peet’s paid a penalty for failing to close the deal.

Sources: Los Angeles Times, Wall Street Journal