Irvine-based Diedrich Coffee Inc. is being acquired by Emeryville-based specialty coffee shop operator Peet's Coffee & Tea Inc. in a $213 million cash and stock transaction.

The offer is 28% higher than what Diedrich's shares closed at on Monday. Shares of Diedrich were up about 25% in afterhours trading on a market value of $210 million.

The deal is set to close by year's end.

Peet's is buying Diedrich to get into the growing market for what are known as K-Cups.

Diedrich is one of a handful of companies licensed to make K-Cups, developed by Keurig Inc., part of Vermont-based coffee wholesaler Green Mountain Coffee Roasters Inc.

K-Cups allow you to brew a single cup of coffee in a special machine by putting one of the K-Cups into the slot where coffee grounds and a filter would go on other machines.

Growing sales of K-Cups have helped drive revenue and profits at Diedrich, which has soared on Wall Street this year.

Shares of the company are up about 8,000% this year as growth stock investors have flocked to the company’s lightly traded shares.

Diedrich used to run coffeehouses before getting out of that business. It got rid of the last Diedrich stores in 2006, when it sold 40 of them to Starbucks Corp.

In March, the company exited the last of its retail operations when it sold its Gloria Jean’s Gourmet Coffees & Teas chain to Praise International North America, an affiliate of Australia’s Gloria Jean’s Coffees International Pty. Ltd., for $3.1 million.

Diedrich announced last month it was seeking new chief executives as part of the shift in its business.

Current Diedrich chief Russ Phillips is expected to stay on during the search and remain a member of the company’s board.