Second Cup to divest interest in Coffee People
Move undertaken to create value for Second Cup shareholders
TORONTO, ONTARIO--Coffee People, Inc. (NASDAQ - MOKA), 70 per cent owned by The Second Cup Ltd. (TSE - SKL), today announced it has signed a letter of intent to be acquired by Diedrich Coffee [Nasdaq:DDRX - news], Inc. (NASDAQ - DDRX).
The transaction is valued at more than $3.00 (U.S.) per Coffee People share. Coffee People shareholders will receive $10.75 million (U.S.) in cash, 1,667,000 shares of Diedrich Coffee common stock and $14.25 million (U.S.) in cash or a combination of cash and stock. The sale is expected to close by early summer and will result in Second Cup retaining an equity interest in Diedrich. The deal is subject to certain conditions, including the execution of a definitive agreement, securing financing and shareholder and regulatory approval. Second Cup expects to receive approximately $35 million (CDN) in total proceeds. A Second Cup representative will be appointed to the Diedrich Coffee Board following the transaction.
Consolidation Creates Shareholder Value
''We see this as an excellent opportunity to participate in the consolidation in the U.S. specialty coffee industry. In evaluating alternatives, the opportunity to combine Coffee People with Diedrich offered some compelling benefits to Second Cup. Foremost, is the demonstration of value beyond the price at which Coffee People's shares were trading. Upon the completion of the acquisition, Second Cup will receive significant proceeds in cash in addition to retaining a smaller ongoing interest in a larger company with improved prospects for value creation,'' says Michael Bregman, Chairman and CEO, The Second Cup Ltd.
John Martin will continue to serve as Chairman of Diedrich's. Mr. Martin has a record of extraordinary success in the food service industry. Under his leadership, Taco Bell grew from 1,500 units in 1982, to 25,000 outlets 13 years later.
Increased Profits, Expansion Expected
The combined company will have systemwide sales exceeding $150 million (U.S.) through 363 units in 38 states and seven countries. Building on strong market positions in Southern California, Arizona, Oregon and U.S. malls, plans call for aggressive growth through franchising. Diedrich's has announced plans to add more than 1,500 coffeehouses over the next five years.
''This transaction demonstrates more clearly the value of Second Cup's investment in Coffee People and is an important step towards creating shareholder value,'' says Randy Powell, President and CEO, Second Cup.
The Second Cup Ltd. is a consumer products and services company, which trades on the Toronto Stock Exchange under the symbol SKL. As the leading specialty coffee retailer in Canada, Second Cup operates 369 cafes across the country offering the world's finest coffee.
Contact:
Strategic Objectives Inc.
Michael Shipticki
(416) 366-7735
(416) 366-2295
Email: mshipticki@strategic-objectives.com
or
Strategic Objectives Inc.
Judy Lewis
(416) 366-7735
(416) 366-2295
Looks like the deal would close early this summer according to this release but Gator seems to think a definitive agreement will be reached by March 5th. I think a call to the company would be money well spent before making your investment but I do like MOKA from what I see.
Message 7922687
MOKA closed at $2 1/8 on Friday and could be trading at $3 or more by March 5th if Gator is correct.
Regards, Jeff |
