M&A

13 November, 2009

UPDATE 2-Green Mountain buys Canadian licensee, ups outlook

* To enter Canadian market

* Raises Q1, FY outlook

* Acquisition accretive to FY EPS

* Shares trading flat (Adds details, background; updates share movement)

Nov 13 (Reuters) - Green Mountain Coffee Roasters Inc (GMCR.O) acquired the wholesale business of its licensee Timothy's Coffees from an affiliate of private equity firm Sun Capital Partners for $157 million in cash to enter the Canadian market, and raised its first-quarter outlook.

"This acquisition will provide Green Mountain with a Canadian presence and a coffee roasting facility in Toronto," Chief Executive Lawrence Blanford said in a statement.

Green Mountain, which sells the single-cup Keurig brewers and their accompanying K-Cup refills, said the deal also includes Timothy's World Coffee brand. Timothy's is a licensed roaster of Keurig, which was acquired by Green Mountain in 2006.

Blanford said the retail part of Timothy's business will continue to be operated by Bruegger's Enterprises, an affiliate of Sun Capital Partners, and the deal includes a five-year coffee supply agreement with Bruegger's Canadian affiliate.

Timothy's wholesale coffee business distributes to retailers, online retailers, offices, hotels, grocery stores and food service establishments throughout Canada and the United States.

Green Mountain also raised its first-quarter and full-year outlook, as it expects the acquisition to add to earnings per share in fiscal 2010. [ID:nWNAB5799]

On Wednesday, shares of the the Waterbury, Vermont-based company had slumped as much as 12 percent as investors were disappointed by its first-quarter earnings outlook. [ID:nBNG495622]

The Timothy's deal is Green Mountain's second acquisition this year. It acquired the wholesale business of Tully's, another K-cup licensee, in March to expand its presence on the U.S. West Coast.

Green Mountain shares were up 11 cents at $68.46 Friday morning on Nasdaq. They rose as much as $70.23 earlier in the session. (Reporting by Mihir Dalal in Bangalore; Editing by Unnikrishnan Nair )

Source: http://www.reuters.com