Caribou Coffee to Come Under JAB - Analyst Blog
19 Diciembre 2012 - 2:20AM
Zacks
Caribou Coffee Company
Inc. (CBOU) inked a definitive merger agreement with
German private equity company, Joh. A. Benckiser (JAB) Group. Per
the deal, JAB will acquire Caribou Coffee through an all-cash deal
worth approximately $340 million or $16.00 per share.
The offer price is at a 30% premium to Caribou Coffee’s closing
stock price as on December 14, 2012, the last trading day prior to
the announcement of the transaction. Upon the closure of the deal,
Minneapolis, Minnesota-based Caribou will continue to operate as an
independent company retaining its brand, management team and growth
plan. The deal is expected to be sealed in the first half of
2013.
JAB and its affiliates focus on investments in premium brands in
the rapidly growing Consumer Goods category. There is another
U.S.-based coffee roaster cum retailer in JAB’s portfolio ???
Peet's Coffee and Tea. JAB group took over Peet in October this
year. Apart from Peet, JAB group has a minority stake in D.E Master
Blenders 1753 N.V., an international coffee and tea company.
We view the deal as strategically positive as it holds immediate
cash value for the shareholders of Caribou at a premium over the
current trading value. The deal will likely benefit this
second-largest company-owned premium coffeehouse operator of the
U.S. as its acquirer also operates in the same vertical and has
prior knowledge of handling coffeehouses.
On the other hand, the acquisition holds significant promise for
JAB Group as well. Apart from enjoying a leading position by the
virtue of its size, Caribou stands out to be a lucrative
acquisition target given its strong growth strategy, untainted
balance sheet and solid fundamentals.
As of September 30, 2012, Caribou Coffee had 610 coffeehouses, of
which 408 were company-owned and 202 franchised. It remains focused
on unit growth of 10%???12% in 2012 and 2013.
Caribou’s association with JAB will bring greater diversity to the
latter’s consumer products business and prepare the German company
to strive in the specialty coffee market through sector
consolidation.
As far as valuation goes, a few analysts believe that the offer
price does not complement the company’s potential. The offer price
of $16 per share is substantially below Caribou’s 52-week high of
$18.84 per share as well as the recent target prices set by several
analysts.
However, the analysts believe that
a competing bid for Caribou Coffee is unlikely. Caribou which
competes with the likes of Starbucks Corp. (SBUX)
and Dunkin' Brands Group Inc. (DNKN) currently has
a Zacks #3 Rank, which translates into a short-term ‘Hold’
recommendation.
CARIBOU COFFEE (CBOU): Free Stock Analysis Report
DUNKIN BRANDS (DNKN): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
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