Peet's Coffee acquired in billion-dollar deal

The offer price of $73.50 per share in cash represents a premium of nearly 29 percent over Peet's July 20 closing stock price of $57.16.

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Shares of Peet's were trading at $73.70, above the offer price, after soaring to $74.25 in morning trading on the Nasdaq.

Peet's, a specialty coffee and tea company, was founded in 1966 and competes with chains such as Starbucks Corp. The Seattle-based coffee behemoth owned Peet's for a few years in the 1980s.

Joh. A. Benckiser, the investment vehicle for the Reimann family of Germany, owns stakes in companies such as household products maker Reckitt Benckiser Plc and fragrance and cosmetics company Coty Inc.

Benckiser expressed a strong taste for the coffee business earlier this month when it announced it might increase its minority stake in D E Master Blenders 1753 NV, the Douwe Egberts coffee business spun out of Sara Lee and listed in Amsterdam.

Along with Benckiser, BDT Capital is participating in the Peet's deal as an adviser and minority investor. Chicago-based BDT was founded by Byron Trott, a longtime confidant of billionaire investor Warren Buffett.

 The deal is expected to close in about three months and is not subject to a financing condition, the parties announced.

Once it is completed, Peet's will be privately held. The current management and employees will remain with the company, and its headquarters will stay in Emeryville, Calif.

Mitchell Pinheiro of Janney Capital Markets said in a client note that Peet's was a logical acquisition target because of its strong brand and growth potential. But the analyst was a bit surprised by the going-private deal.

"We thought Peet's would make more sense for a larger packaged food company that would have more marketing muscle, distribution power and cost synergies, as opposed to being part of a private equity portfolio," he wrote.

Peet's was started by Dutch immigrant Alfred Peet in 1966.

 According to the company, Peet trained the founders of Starbucks and supplied that company's first store with Peet's fresh-roasted coffee beans in 1971.

 Peet retired in 1983. A year later, Starbucks bought Peet's and its four stores in the San Francisco Bay Area.

 In 1987, Jerry Baldwin, a Starbucks co-founder, and others sold that company, and Baldwin stayed with Peet's. He has been on the Peet's board since 1971. He was the company's CEO from 1971 to 1994 and its chairman from 1994 to 2001.

 Peet's went public in 2001 and has the bulk of its stores in California. It also has locations in Colorado, Illinois, Massachusetts, Oregon and Washington. Its coffee is also sold in thousands of grocery stores.

 Citigroup is serving as Peet's exclusive financial adviser on the deal and delivered a fairness opinion to the company's board. Cooley LLP is acting as Peet's legal adviser.

 Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal adviser to Joh. A. Benckiser. Morgan Stanley & Co LLC and BDT & Co. are serving as its financial advisers.

Reuters and the Associated Press contributed to this story.