Alabama-based coffee and tea producer Royal Cup plans to acquire Texas counterpart Farmer Brothers Coffee in a deal reportedly valued at about $28 million, the companies announced last week.
Under the agreement, Royal Cup would acquire all outstanding shares of Farmer Brothers for $1.29 per share. Royal Cup officials said that the combination would align roasting, distribution and equipment service into a broader organization, which would, in turn, be positioned to serve customers across the foodservice, hospitality, health care, retail and private label segments.
Officials said the combined company would also be able to expand service coverage, manufacturing capabilities and direct store delivery.
“This is a transformational and strategic step, which we believe materially strengthens our competitive position and advances our long-term growth strategy,” Royal Cup President and CEO Chip Wann said in a statement. “This transaction will allow Royal Cup and Farmer Brothers to combine our complementary capabilities and build a more resilient national organization.”
The transaction is expected to close in the second quarter of the year, pending approval from Farmer Brothers shareholders and other closing conditions.
