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Farmer Brothers Acquires Coffee Bean International

Farmer Brothers Co. has acquired Coffee Bean International. Coffee Bean International focuses on the upper end of the quality spectrum, serving several thousand customers nationally, including independent specialty coffee shops and larger, prestigious quality-oriented chains and private-label retailers.

“We believe CBI will help re-ignite the growth of Farmer Brothers by establishing an immediate presence in the fast-growing market for specialty coffee,” said Rocky Laverty, president and chief operating officer of Farmer Brothers, in a prepared statement. “As CBI gains access to our capital strength and distribution capabilities, we believe it will be able to further capitalize on the opportunities for its specialty coffees and private-label programs.”

Farmer Brothers paid approximately $22 million in cash under a stock purchase agreement with Coffee Bean Holding Co., Inc., the parent company of Coffee Bean International. The final cash outlay will reflect various contingent adjustments. Farmer Bros. is planning additional investments in the CBI business, including improvements to the roasting plant in Portland that will increase CBI’s capacity.

Coffee Bean International will continue to be based in Portland, Oreg., and will operate as a separate company under its current leadership and management team. After the planned investments in its roasting plant, Coffee Bean International will remain one of the few companies with the ability to achieve significant production volumes solely using “artisan” hand-roasting methods that maximize freshness and flavor.

There are few overlaps between the two companies, which compete for different customers and offer distinct products and services. Coffee Bean International provides unique specialty coffees to customers such as coffee houses and private-label retailers. Farmer Brothers, in contrast, serves a variety of traditional coffee blends at different price points to restaurants such as independent operators and regional and franchise chains, as well as other institutional buyers such as hotels, convenience stores and hospitals. Farmer Brothers, through its far-reaching distribution network, competes on the quality and cost of its coffee, its personalized service and timely delivery and its wide range of related products.

“CBI has a well-earned reputation for the highest quality products and for the effectiveness of its marketing and brand management programs. We are thrilled that the people who built this excellent reputation will continue with us in Portland,” said Guenter Berger, chairman and CEO of Farmer Brothers. “Coffee Bean International will benefit from the resources of a larger coffee company that appreciates and supports its vision of helping customers ‘increase desire and appreciation for true artisan-roasted specialty coffees.’ In addition, we are looking forward to tapping its expertise and products in specialty coffee.”

“Our unique company has grown into one of the largest specialty roasters in the U.S., notably without changing the way we roast coffee or the quality of the coffee that we produce. Farmer Bros. understands our business, supports our operations and growth initiatives, and is providing us with the chance to grow — our way,” said Patrick Criteser, the president and CEO of Coffee Bean International. “With the support and resources of Farmer Bros., we will be better positioned to achieve our vision of becoming the world’s preeminent wholesale specialty roaster.”

The two companies began discussing the combination about three years ago. Farmer Bros. has previously stated that it would consider strategic acquisitions of coffee and related businesses as it completed work on its new computer and information systems.

The financial advisor for Farmer Brothers in this transaction was Kerlin Capital Group, LLC of Los Angeles, and legal advisor for Farmer Bros. was Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP. The financial advisor for Coffee Bean International was Lincoln International of Chicago.

http://www.amonline.com/web/online/Vending-Market-Watch-News/Farmer-Brothers-Acquires-Coffee-Bean-International/1$18812