USA Today reports that coffee chain retailer Peet’s Coffee & Tea said Monday it has raised its offer for the wholesale roaster and distributor Diedrich Coffee about 24% to $265 million.

Peet’s (PEET) said Monday its revised proposal is valued at $32 a share, up from the $26 a share, or $213 million, proposed in November. It includes stock and cash.

The sweetened offer comes after Green Mountain Coffee Roasters (GMCR) bid $30 a share in cash — about $247 million — for Diedrich.

But investors sent Diedrich Coffee (DDRX) shares above the latest price being offered by Peet’s, suggesting they think the bidding could go higher.

Under the terms of Peet’s revised proposal, Peet’s said it will pay $19.80 in cash and 0.321 of one share of Peet’s common stock for each share of Diedrich common stock.

The value of the stock component will rise and fall with changes in Peet’s stock price. In the previous offer, the stock component was based on a fixed dollar value per share of Diedrich common stock subject to a maximum of 0.315 of a share.

“With our enhanced proposal, we continue to believe that this acquisition would create significant value for our shareholders,” said Patrick O’Dea, president and chief executive of Peet’s.

Diedrich, based in Irvine, California, makes coffee for both retail and wholesale customers. It also produces and sells K-Cups for Keurig’s single-cup brewing system through a license with Keurig.

USA Today

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