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Peet's Coffee & Tea Raises Offer For Diedrich

Continuing month-long bidding fight for Diedrich Coffee, Peet’s raised its cash-and-stock offer Monday, causing rival Green Mountain Coffee Roasters to weigh its next move.

EMERYVILLE, Calif. (AP) -- Peet's Coffee & Tea Inc. continued a monthlong bidding fight for Diedrich Coffee Inc. by raising its cash-and-stock offer Monday, causing rival Green Mountain Coffee Roasters Inc. to weigh its next move.

Peet's Coffee late Monday boosted its cash-and-stock offer to the equivalent of $32.50 per share, or $269 million, according to a spokesman. That is above the $32 per share, or $265 million, it offered last week.

Peet's said it will pay between $21.26 and $22.87 in cash and 0.321 of one share of its common stock for each share of Diedrich common stock. That's up from a previous offer of $19.80 in cash and 0.321 of one share of Peet's common stock for each share of Diedrich common stock.

Diedrich's board previously said Green Mountain's $265 million, or $32 per share, second all-cash offer was superior to the one made by Peet's because the value of Peet's bid can fluctuate based on its own stock price. Peet's stock closed on Monday at $32.56. Green Mountain on Nov. 23 offered $30 per share in cash, or $247 million.

On Tuesday morning, Green Mountain said it is in the process of evaluating its next steps, following Peet's offer. Green Mountain believes its all-cash offer is superior because Peet's bid has a significant stock component.

Green Mountain and Peet's want to own Diedrich's license to produce single-serve coffee pods that are called K-Cups used in Keurig Inc.'s brewing system.

Janney Capital Markets analyst Mitchell B. Pinheiro said Green Mountain has "ample room" to sweeten its own offer.

"Clearly, both companies see significant value in Diedrich, a reflection of the significant future growth potential in the Keurig brewing system," said Pinheiro, who rates shares of Peet's "Buy."

Even if Peet is unsuccessful in buying Diedrich, it will not stop Peet from getting a Keurig license separately, Pinheiro said, which appears to be Peet's ultimate goal.

Shares of Peet's rose 7 cents to $32.63, and shares of Green Mountain advanced 70 cents to $63.68. Diedrich's stock price rose 58 cents to $33.70.

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