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Which Coffee Company Gets Bought Out Next?

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This morning we got news that Caribou Coffee (UNKNOWN: CBOU.DL  ) will be taken private at $16 a share -- a nearly 30% premium -- but it isn't the first premium java maker to get taken out this year. Before this morning's $340 million deal, Peet's Coffee & Tea agreed to a $1 billion buyout bid this summer. In fact, Joh. A. Benckiser's plan to take Peet's also came at nearly the same premium -- 29%.

So will the last publicly traded premium coffee company please step up to the bidding block?

The market is already picking favorites. Coffee Holding (NASDAQ: JVA  ) , a smallish player behind a few relatively obscure specialty brews, was trading as much as 13% higher on the news. Farmer Brothers (NASDAQ: FARM  ) , a provider of coffee, tea, and other beverages to companies and institutions, saw its sales spike to a nearly 52-week high.

Starbucks (NASDAQ: SBUX  ) and Green Mountain Coffee Roasters (UNKNOWN: GMCR.DL  ) saw their shares open only marginally higher, but that's understandable. Starbucks and Green Mountain are more likely to be hunters here than prey.

Even though Starbucks has turned its attention to teas, juices, and bakeries in recent deals, this is still the same company that swallowed Seattle's Best nearly a decade ago. Green Mountain, meanwhile, went on a buying spree in anticipation of the expiration of its K-Cup patents, snapping up Van Houtte, Tully's, and Timothy's. It also outbid Peet's for Diedrich Coffee.

However, aren't all of the premium brands of brews in Green Mountain's back pocket worth exploring in assessing Green Mountain as a takeover target? Caribou is being taken out at nearly 30 times forward earnings, Peet's at 32 times forward profit projections.

Green Mountain is fetching less than half those multiples. Sure, Coffee Holding is selling for even half of the forward earnings multiple of Green Mountain, but it's growing slower and doesn't own the same kind of marquee brands. And that's before we get to the still-potent Keurig ecosystem.

There aren't too many publicly traded premium coffee companies left, but that will only make the names that remain that much more attractive.

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Related Tickers

12/31/1969 7:00 PM
CBOU.DL $0.00 Down +0.00 +0.00%
Caribou Coffee Com… CAPS Rating: ***
GMCR.DL $0.00 Down +0.00 +0.00%
Keurig Green Mount… CAPS Rating: **
FARM $32.13 Up +0.62 +1.97%
Farmer Brothers CAPS Rating: No stars
JVA $5.42 Down -0.03 -0.55%
Coffee Holding CAPS Rating: **
SBUX $53.63 Down -0.04 -0.07%
Starbucks CAPS Rating: ****