Is Starbucks pondering Peet’s purchase?

Is Starbucks pondering Peet’s purchase?

Starbucks Corp. isn’t saying whether Peet’s Coffee & Tea is a potential acquisition target, but there’s no doubt the Seattle-based coffee giant is interested in “buying large and small companies” to grow its consumer products business.

As Reuters reported, CEO Howard Schultz said exactly that at an investor conference Wednesday in New York. And there’s some sound logic to back up recent speculation that Peet’s would be a tasty addition.

Acquiring Peet’s would accomplish two things for Starbucks. It would bulk up its portfolio of grocery store-ready brands and deliver a solid distribution network, particularly important now that Starbucks distribution deal with Kraft Foods is crumbling.

Those food giants have been waging a very public battle over a strategic alliance that has had Kraft distributing Starbucks packaged coffee to grocery retailers nationwide for the past 12 years.

Stifel Nicolaus analyst Steve West made the case for a Starbucks/Peet’s combo in a report this week, writing that the Emeryville, Calif.-based roaster’s distribution network makes it a “nice fit to deliver Starbucks into the distribution business.” He also noted that Peet’s could give Starbucks a proven premium store brand to complement its lower-end Seattle’s Best brand — a move that supports Starbucks’ desire to build its retail business.

According to West, whose report was detailed by the trade pub Nation’s Restaurant News, Starbucks could acquire Peet’s at a “30-percent to 40-percent premium to its recent stock price of about $38.”

Nation’s Restaurant News put the Peet’s-acquisition question directly to Starbucks.

No surprise, the Seattle roaster said it doesn’t comment on rumors and that it is focused on “building an exceptional infrastructure to support [its] global consumer products business for the future.”

Whether Peet’s will be a part of that effort remains to be seen. Wall Street, however, apparently likes the idea of an acquisitive Starbucks. The company’s stock rose 3.6 percent Wednesday following Schultz’s comments.

Suzanne Stevens

Web editor

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