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Starbucks in Talks to Buy Peet's

Starbucks in Talks to Buy Peet's

Because Starbucks coffee isn't finished running every decent coffee company into the ground, the caffeinated behemoth is in talks to buy Northern California-based Peet's. The two have been quietly dating for months, but the relationship recently grew serious with the two companies now considering marriage. Peet's stock closed up 9.4% at $46 on Tuesday, upon news of the potential merger.

Good for business, bad for coffee drinkers. We expect to see more coffees that are wildly over-roasted to mask low quality, under-ripened beans. All hail the (further) slide toward mediocrity.

Valued at $26 billion and with over 10,000 stores in the United States, Starbuck's is the alpha in this relationship. Peet's, in comparison, has 192 retail stores and is valued at $589 million.

Analyst Steve West tells Reuters the big growth area is the grocery business:

"What can Starbucks do with Peet's business in the next 2 to 3 years? They can probably double or triple it," West added.

Peet's is itching to get into the single-cup coffee market, according to Reuters. In early 2010, the company lost a takeover battle with Green Mountain for Diedrich Coffee, which makes coffee for Green Mountain's Keurig machines.

The news was first reported by dealReporter, a paid, online publication that delivers news about mergers and acquisitions to clients in the equity and fixed-income markets.

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