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Caffeine wars!

And what could be more important than THAT…? :-)

The Emeryville, California-based company, Peet’s Coffee and Tea Inc.has investors wagering rival bidders will attempt to top a $1 billion takeover offer that’s already the most expensive U.S. beverage deal. According to

Peet’s traded as much as 3 percent above the $73.50-a-share bid from Joh. A. Benckiser last week, signaling some traders who bet on acquisitions expect the Emeryville, California-based company to be sold at a higher price. Including net cash, the $941 million offer values the owner of specialty cafes and grocery products at 21 times earnings before interest, taxes, depreciation and amortization, the richest multiple for an American maker of non-alcoholic drinks in deals larger than $500 million, according to data compiled by Bloomberg.

Although increased coffee bean prices hurt profits, Peet’s boosted its supermarket sales by 30 percent last year. According to Wedbush Inc., Starbucks Corp. may be interested in making a counterbid to gain a more expensive grocery store brand and prevent Peet’s from expanding its coffee shops.

Oscar Gruss & Son Inc. says Starbucks, which was founded five years after Peet’s, could pay as much as $80 a share to beat out the offer from JAB, the investment company of the German billionaire Reimann family.

Peet’s “would give them an entree into the gourmet market,” Louis Meyer, a New York-based special situations analyst at Oscar Gruss, said in a telephone interview. “That’s why it is trading over — because you have a natural, logical buyer that financing any transaction would not be a problem. If you’re going to get a counterbid, you’re going to get something that has the appearance of a knockout counter bid.”

A spokespan for Peet’s, Paul Kranhold, woudl not comment on whether the company has been in contact with another bidder or received other offers. Jim Olson, a spokesman for Starbucks, said the Seattle-based company doesn’t comment on market rumors.

JAB, a closely held German holding company, announced on July 23 an agreement to take Peet’s private for about $1 billion plus the assumption of its cash. The firm is gaining control of more than 190 specialty cafes in the U.S. and an expanding business of selling ground coffee and teas to stores such as Whole Foods Market Inc. and Wal-Mart Stores Inc.

JAB, which also disclosed this month a 12 percent stake in Dutch tea and coffee maker D.E Master Blenders 1753 NV, said it expects the Peet’s deal to close in about three months, pending shareholder and regulatory approvals.

Tom Johnson, a spokesman for JAB, said the company wouldn’t comment on Pete’s shares trading above the offer price or whether there may be a rival bidder.

Peet’s is named for Alfred Peet, who founded the company in Berkeley, California, in 1966. The Starbucks’ co-founder Gerald Baldwin was mentored by Peet. Baldwin later bought Peet’s and sold the Starbucks chain. Baldwin served as Peet’s CEO for about 23 years and is still a board member after more than 40 years.

Shares of Peet’s ended at $75.17 on July 27, the highest closing level since the bid was announced. At 2.3 percent more than the takeover price, it’s the second-biggest gap of any pending U.S. deal of at least $500 million, data compiled by Bloomberg show. The stock rose as high as $75.74 last week in intraday trading.

“Given where the stock price is trading, there is a clear indication that many shareholders are thinking that a rival bid will come in,” Nick Setyan, a Los Angeles-based analyst at Wedbush, said in a phone interview.

Today, the shares rose 33 cents to $75.50, the highest closing price since April.

You can read about the speculation concerning bids for Peet’s in the pages.

-Bill at

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