Green Mountain trumps Peet's bid; Agrium to push for CF board seats; Oracle gains deal support

By Cristal Cody

Tupelo, Miss., Dec. 2 - Green Mountain Coffee Roasters, Inc. continued the bidding war for Diedrich Coffee, Inc. with a bump to $35.00 a share in cash, and the company appears committed to sealing the deal, an analyst told Prospect News on Wednesday.

Meanwhile, the nearly yearlong fertilizer battle continued on Wednesday. Agrium Inc. said that it plans to nominate a slate of directors to CF Industries Holdings, Inc.'s board at the company's 2010 annual shareholders meeting after failing to strike up negotiations for a $5 billion takeover of the Deerfield, Ill.-based nitrogen and phosphate fertilizer producer.

In other situations, the European Commission could make a decision on Oracle Corp.'s $7.4 billion acquisition of Sun Microsystems, Inc. before the Christmas break, an analyst said Wednesday.

On Wall Street, equities were mixed.

The Dow Jones Industrial Average fell 18.90 points, or 0.18%, to 10,452.68.

The Standard & Poor's 500 index rose 0.38 of a point, or 0.03%, to 1,109.24.

The Nasdaq Composite index added 9.22 points, or 0.42%, to close at 2,185.03.

Coffee battle brews

Diedrich's board determined Wednesday that Green Mountain Coffee's offer is superior to the $32.50-a-share cash-and-stock offer from Peet's Coffee & Tea, Inc.

"They really are committed to making this strategic combination happen," Jon Anderson, an analyst with William Blair & Co., told Prospect News on Wednesday of Green Mountain's intent.

Peet's has until Monday to negotiate with Diedrich for an offer above Green Mountain's $290 million cash bid, according to its merger agreement with the Irvine, Calif.-based specialty coffee distributor and roaster.

Diedrich said in a statement on Wednesday that if Peet's fails to deliver a superior offer, it will terminate the deal and pay a break-up fee.

Diedrich must pay Peet's a $6.39 million termination fee if it terminates the transaction during the go-shop period, according to the registration statement Peet's filed with the Securities and Exchange Commission.

Peet's had originally reached an agreement with Diedrich to be acquired for $26.00 a share in cash and stock.

On Monday, Emeryville, Calif.-based Peet's raised its bid to $32.50 a share in cash and stock in response to Waterbury, Vt.-based Green Mountain's revised $32.00-a-share cash bid. Peet's said it would pay 0.321 of a share and a range of $21.26 to $22.87 in cash to equal $32.50 a share.

Peet's said in a statement on Wednesday that it will take the next few days to consider the company's alternatives.

Diedrich's stock closed up $1.16, or 3.41%, at $35.13 on Wednesday.

Green Mountain shares slipped $1.15, or 1.85%, to close at $60.89.

Shares of Peet's fell 1 cent, or 0.03%, to $32.77.

Agrium plants next move

Agrium, a Calgary, Alta.-based agricultural products retailer and fertilizer nutrients producer, said Wednesday that it also has challenged CF to remove a poison pill that makes a takeover harder.

Agrium's tender offer to acquire CF at $45.00 in cash and one Agrium share per CF share is scheduled to expire on Dec. 18.

In a letter to CF's board, Agrium president and chief executive officer Michael Wilson noted that holders of 60% of CF shares have tendered in Agrium's offer.

"The time is overdue for you to remove these preclusive barriers and let your stockholders decide for themselves whether to accept Agrium's offer," Wilson said.

Last week, Agrium announced that it will acquire 24 high-end farm retail stores from Agriliance LLC to bolster its retail business.

Agrium is expected to continue to go after other acquisitions in retail and in fertilizer nutrient production, Mark Connelly, an analyst with Sterne, Agee & Leach, Inc., said in a research note released Wednesday to Prospect News.

"Given management's experience integrating Royster-Clark and UAP, we believe Agrium is well positioned for this and future acquisitions across both platforms," Connelly said.

Meanwhile, CF continues its hostile pursuit of Terra Industries, Inc.

On Tuesday, CF said it extended to Dec. 31 the $2.5 billion in financing commitments in place to cover the acquisition of Terra.

Terra, a Sioux City, Iowa-based nitrogen producer, has continued to refuse CF's offers, even after CF won three seats on the company's board at the annual shareholders meeting on Nov. 20.

CF's latest offer includes $24.50 in cash, excluding Terra's $7.50-a-share cash dividend to be paid Dec. 11, and 0.1034 of a share of CF.

Shares of CF jumped $4.37, or 5.09%, to close Wednesday at $90.27.

Terra shares closed unchanged at $39.00.

Agrium's stock gained $3.14, or 5.51%, to end at $60.11.

Oracle gets deal support

In November, the European Commission extended the antitrust review of Sun's buyout, at Oracle's request in order to prepare its case, to Jan. 27.

The commission has offered preliminary competition objections to the deal over Santa Clara, Calif.-based software maker Oracle's acquisition of Redwood Shores, Calif.-based Sun's MySQL open-source database.

Sun purchased MySQL for $1 billion last year.

The U.S. Department of Justice approved the transaction in August.

Krisztian Szentessy, an analyst with Pali Capital Inc., said Wednesday in a research note that the "major concern for the deal remains approval by the E.U. Commission. The E.U. Commission's antitrust review of ORCL's acquisition of JAVA is in its most crucial two- to three-week period and we expect further volatility to JAVA's share price."

Over the next three weeks, either Oracle will submit remedies to the commission's objections or "we expect that there will be chatter that the E.U. has the intention to either approve or block the deal," Szentessy said.

Oracle has offered $9.50 a share in cash to acquire Sun.

The commission "has a strong incentive to make a decision" before the Christmas holiday break because new commission members will be approved in January, Szentessy said.

Also on Wednesday, the Oracle Applications Users Group, the largest knowledgebase for Oracle application users, released a letter to the commission in support of the deal.

The group's president, Raymond Payne, said in the letter that Oracle's acquisition of Sun would simplify the integration process for merging a variety of technologies.

"The OAUG also believes that no one benefits from further delay that unwarranted uncertainty may bring regarding the European Commission's decision on whether or not to allow the acquisition to occur," the group said.

Sun shares fell 5 cents, or 0.60%, to $8.26.

Oracle's stock rose 22 cents, or 0.98%, to close at $22.66 on Wednesday.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

Diedrich Coffee, Inc. Nasdaq: DDRX

Green Mountain Coffee Roasters, Inc. Nasdaq: GMCR

Oracle Corp. Nasdaq: ORCL

Peet's Coffee & Tea, Inc. Nasdaq: PEET

Sun Microsystems, Inc. Nasdaq: JAVA

Terra Industries Inc. NYSE: TRA

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