Green Mountain Keeps Acquisitions Alive (GMCR)

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is back at the buyout trough.  The newest target is a Montreal rival in Canada called Van Houtte Inc. from an affiliate of Littlejohn & Co., LLC.  Van Houtte roasts and markets gourmet coffee for home and office consumption and distributes it through its direct-to-store delivery and coffee services networks in Canada and the U.S.

The merger is valued at $915 million Canadian or $890 (US) million, based on the September 13 exchange rate and subject to adjustment. The deal is subject to customary closing conditions and regulatory approval and is expected to close by the end of 2010.

Van Houtte has had a relationship with Green Mountain since 2001 and its Canadian brands including Van Houtte®, Brûlerie St. Denis®, Les Cafés Orient Express Coffee® and Brûlerie Mont Royal®.

The acquisition company’s last twelve month’s net sales were about $433 million (US) and it employs approximately 1,700 people in Canada and the U.S.

Green Mountain’s market cap is $4.65 billion and before the effect of any merger Thomson Reuters has 2010 revenue estimates of $1.34 billion for 2010 (Sept-end) and $1.97 billion for 2011 (Sept-end).  GMCR anticipates that the acquisition will be neutral to slightly dilutive to its earnings per share in the first twelve months after closing and accretive thereafter.  The company intends to finance the acquisition through a combination of cash on hand and $1.35 billion of new debt financing comprised of a $750 million 5-year senior secured revolving credit facility, a $250 million 5-year senior secured term loan A facility, and a $350 million 6-year senior secured term loan B facility.

At $35.24, Green Mountain’s 52-week trading range is $19.87 to $35.94.

JON C. OGG