Peet's Coffee To Go Private In $978M Joh. A. Benckiser Buy (Law360)

By Karlee Weinmann

German conglomerate Joh. A. Benckiser GmbH on Monday unveiled its planned $977.6 million Peet's Coffee & Tea Inc. buy, bringing the company private and fleshing out the food and drink holdings of an investment firm better known for its luxury products.

Investors in the Emeryville, Calif.-based company, a leading specialty coffee and tea purveyor in the U.S., would receive $73.50 in the deal, representing a 29 percent premium over the Peet's closing price Friday.

For JAB, which has historically hinged its investments in household and personal care products, the proposed deal would bring into the fold a nearly 200-store network in the growing specialty beverage market in the U.S. that has posted consistent gains in recent quarters.

In the first quarter of 2012, Peet's notched a 4 percent uptick in revenue over the previous year, up to $94.8 million, fueled by a rise in beverage and pastry sales and an increase in whole-bean sales. That comes on the heels of Peet's double-digit year-over-year revenue growth, with the $372 million raked in for last year an 11 percent spike over 2010.

"At JAB, we are committed to owning and investing in companies with strong, premier-quality brands and great people whose values we share," the firm's chairman, Bart Becht, said in a statement. "Peet's is just such a company, and we look forward to preserving the company's culture and core values, while supporting management's vision for future growth."

JAB will keep intact the company's current management team and keep its headquarters rooted in California's Bay Area, not far from where the company started out in Berkeley four and a half decades ago.

The German firm is most widely known for its stakes in well-known brands such as upscale shoe name Jimmy Choo and other high-end European fashion icons.

It also has a sizable interest in Coty Inc., a cosmetic and fragrance company, which caught a wave of press in the spring for opting for a $700 million initial public offering after beauty industry rival Avon Products Inc. spurned repeated buyout bids.

Media reports last spring suggested Starbucks as a potential suitor for Peet's after the two were rumored to be discussing a merger to give both brands a stronger foothold in grocery stores. Peet's founder Alfred Peet has a history with the people behind the Starbucks franchise, according to the Los Angeles Times, having sold them coffee beans when the mega-chain opened for business soon after Peet's got off the ground.

The top brass at Peet's in a statement reinforced JAB's tradition of taking on successful companies and thrusting them forward, saying also that the company will stay true to its commitment to quality coffees and teas through and beyond the sale.

This commitment is what has distinguished the Peet's brand among all others and will continue to guide us as we go forward," Peet's President and CEO Patrick O'Dea said in a statement.

Chicago-based merchant bank BDT Capital Partners LLC is also participating in the proposed transaction alongside JAB as a minority investor, the parties said.

Peet's share prices soared on the announcement, surging nearly 30 percent — just past JAB's offer price — in Monday afternoon trading.

The specialty coffee company's board of directors unanimously approved the terms, which, pending approval by its shareholders and regulators, the parties expected to be finalized within the next three months.

Peet's is represented by Cooley LLP, with Citigroup Inc. acting as financial adviser.

JAB is represented by Skadden Arps Slate Meagher & Flom LLP, with Morgan Stanley & Co. LLC and BDT & Co. serving as financial advisers.

Citigroup is represented by Davis Polk & Wardwell LLP.

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