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Green Mountain Extends Diedrich Buyout Offer; Set To Close Soon?

Vermont-based Green Mountain Coffee Roasters Inc. again has extended its offer to buy Irvine-based coffee seller Diedrich Coffee Inc. with some indication the long delayed deal soon could move forward.

Diedrich is in the process of being acquired for $290 million in cash by Green Mountain, which in December prevailed over Emeryville-based Peet’s Coffee & Tea Inc. in a bidding war.

Green Mountain’s offer to buy Diedrich was extended to May 10. Its last extended offer was set to expire Monday.

The weeklong extension comes after several monthly extensions and could indicate Green Mountain is more confident about closing the deal after running into issues with the Federal Trade Commission.

In January, regulators asked Green Mountain and Diedrich for more details about the deal under the Hart-Scott-Rodino Antitrust Improvement Act of 1976.

The inquiry likely has to do with sales of a new type of single brewing cups known as K-Cups, which Green Mountain will likely control with the purchase of Diedrich.

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.

Green Mountain’s Keurig Inc. unit owns the K-Cup brand and grants licenses for others to produce them. Diedrich was one of a handful of K-Cup licensees.

Regulators could have concerns about the deal’s impact on the market for K-Cups.

Green Mountain is seeking to consolidate production and sales of K-Cups, according to Mitchell Pinheiro, an analyst with Philadelphia-based Janney Montgomery Scott LLC.

Green Mountain bought Tully’s Coffee brand and wholesale coffee business from Washington-based Tully’s Coffee Corp. in last March and Toronto specialty coffee company Timothy’s Coffees of the World Inc. last November.

Producing and selling K-Cups is about twice as profitable as collecting royalties from licensees.

Rival Peet’s has extended its rejected offer for Diedrich several times in the hopes a rival buyout bid is derailed by regulators.

Green Mountain also settled a class action lawsuit filed on behalf of the Diedrich stockholders who argued the company was paying too little in the acquisition.

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