Under terms of the agreement, Lavazza has agreed to purchase $250m in aggregate purchase price of newly issued shares of GMCR’s $0.10 par value common stock, or approximately 7% of GMCR’s current outstanding shares, at a price per share equal to the 60 day volume weighted average price at closing minus 7.5%.
This investment requires approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and is expected to close in September 2010.
In addition, the companies announced that they’re working together with the intent to reach a further agreement pursuant to which GMCR and Lavazza will cooperate to develop and Lavazza will manufacture new single-serve espresso machines and single-serve espresso capsules designed for use with such machines.
These co-developed machines would complement GMCR’s line of Keurig single-cup coffee brewers. It’s not anticipated that any of these co-developed machines and/or capsules will be available for the marketplace prior to GMCR’s fiscal year 2013.
The further agreement also may provide GMCR the ability to distribute, market and sell existing coffee espresso single-cup machines utilising Lavazza’s espresso technology for in-home use in the US and Canada.
The common stock purchase agreement provides that Lavazza …
In addition, the Agreement contains a five-and-one-half-year customary standstill period, subject to certain exceptions after a one-year period, including the right to purchase additional shares up to 15% of the company’s outstanding shares.
GMCR intends to use the proceeds of the stock sale for general corporate purposes, including financing GMCR’s growth plans and enabling initiatives. GMCR’s estimates for its fiscal fourth quarter 2010 and fiscal 2011 provided on 28 July 2010 remain unchanged.
“Lavazza’s investment in GMCR reflects their confidence in our strategy, vision and execution and provides enhanced financial flexibility to fund our growth and future enabling initiatives,” said Lawrence J Blanford, president and CEO, Green Mountain Coffee Roasters. “We have developed an effective working relationship with Lavazza and, based on the impressive quality of the Lavazza people and technology, we believe there’s strong potential for a commercial alliance between GMCR and Lavazza that will leverage our complementary coffee systems and respective geographic strengths.”
“We’re thrilled to have entered this very important alliance with GMCR,” said the CEO of Lavazza, Gaetano Mele. “As a result of our participation in the capital of GMCR – a hugely successful company and a leader in single-serve brewed coffee in North America – we hope to work together to access, and leverage the combination of our extensive espresso expertise and GMCR’s powerful North American sales and marketing platforms.
“The distribution agreement we expect to consummate in the near term should represent a unique opportunity to fully develop the potential of the authentic Italian espresso, and espresso-based beverages, in North America.”
Source: Green Mountain Coffee Roasters
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