Green Mountain To Buy Van Houtte For $890 Million
WATERBURY, Vt. (AP) — Green Mountain Coffee Roasters Inc. said Tuesday it will buy competitor Van Houtte for $890 million in an attempt to get a better foothold in the Canadian market.
Van Houtte, a Keurig single-cup coffee machine licensee, has coffee brands including Brulerie St. Denis, Les Cafes Orient Express Coffee, Brulerie Mont Royal and its namesake. The Montreal company roasts and markets gourmet coffee for homes and offices and distributes it through direct-to-store delivery and coffee services networks in Canada and the U.S.
The deal is the latest in a series of acquisitions for Green Mountain, which completed its $300 million takeover of Diedrich Coffee Inc. in May. Diedrich was also a roaster licensed to produce K-Cups, which fit into the Keurig system.
"This acquisition will enhance Green Mountain's Canadian presence and is expected to strengthen our North American geographic expansion with a well-known Canadian brand platform that includes roasting, manufacturing and distribution capabilities," Green Mountain President and CEO Lawrence Blanford said in a statement.
Green Mountain will purchase Van Houtte from an affiliate of private equity firm Littlejohn & Co., based in Greenwich, Conn. The company plans to look at Van Houtte's Filterfresh U.S. coffee services division, to explore a potential sale. Proceeds from that would be used to lower Green Mountain's outstanding debt.
During the second quarter Green Mountain reported that it saw a major boost from sales of its Keurig brewing systems and K-Cup packs. The coffee company said it shipped 72 percent more K-Cup packs in the second quarter than in the prior year and nearly doubled its shipments of Keurig brewing systems.
Van Houtte's President and CEO Gerard Geoffrion will remain with the company after the deal closes.
The acquisition will be funded with cash on hand and $1.35 billion in new debt financing. The deal is expected to close by year's end.
Shares of Green Mountain, based in Waterbury, Vermont, slipped 49 cents to $34.75 in premarket trading.