It was a long time brewing and there were plenty of spills, but Diedrich Coffee will go down as a most satisfying investment for its chairman, Newport Beach venture capitalist Paul Heeschen. With the bidding war for the Irvine-based bean roaster percolating to $35 a share or $290 million, the value of Heeschen’s 58% stake has surpassed $150 million—a rich return on the estimated $9 million he’s put into the company since 1992. And it’s an astronomical rise from March, when the long-languishing stock hit a nadir of 21 cents a share. “It’s been a wild and fun ride,” Heeschen says. Indeed. There have been six CEOs since 2000 and the current one is leaving. Long gone are Taco Bell wiz John Martin and company founder and family namesake Martin Diedrich, who now runs Kean coffeehouses in Newport Beach and Tustin. The company tried but failed to mimic Starbucks’ growth, selling off its coffeehouses to focus on wholesaling. Did Heeschen ever doubt the smallish brand could make it? “Never.” The dazzling resurgence has been driven by the single-serve K-Cups, popular in offices and moving into homes. Green Mountain Coffee Roasters and Peet’s Coffee & Tea are vying for Diedrich, which supplies K-Cup packets under three labels and has seen yearly revenue rise by a third, to $62 million. But while investors who jumped in early this year are on a caffeine high, Diedrich has been a downer for most of its public run. Despite the recent surge, the stock remains below its split-adjusted high of $44.50, reached just a few days after the 1996 initial public offering; in May shares reached the $10 level for the first time in nearly nine years. Heeschen unloaded some stock in the IPO to recoup his original $2 million investment and $4 million more, then eventually put in another $7 million. About 45% of his stake is warrants held by his Sequoia Enterprises and WF Trust with an average exercise price of $1.85 a share. In 2007 he bought out another big investor, Westcliff Capital Management, for $3.80 a share. Those prices looked lavish a year ago, but dirt cheap now. Is Diedrich Heeschen’s best investment? “One of the three best,” he says, declining to name the other two …
Irvine Company resorts chief Ralph Grippo has tapped former Ritz-Carlton colleague Brian Rowley as sales and marketing VP for Pelican Hill and the Island Hotel. Rowley moves from Scottsdale, where he marketed the Boulders Resort and the rest of Blackstone LxR Resorts’ Western U.S. properties. Times are tough but the Insider thinks he’s off to a good start: At last week’s Island Hotel holiday party, Rowley received his stack of new business cards from Grippo, removed the rubber band and handed the first card to EE RR …
A little publicity for the Island: Alleged mistress Jaimee Grubbs says she rendezvoused there with Tiger Woods.
