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Gabelli Buys Caribou Coffee on News of Company Merger

December 19, 2012 | About:
GAMCO’s Mario Gabelli has decided to welcome back Caribou Coffee Company Inc. (CBOU) into his portfolio, purchasing 1.98 percent of the company’s outstanding shares, which is a total of 401,974 shares, at an average price of $16.

On Monday, Minneapolis-based Caribou announced its agreement to be acquired by private investment firm Joh. A. Benckiser (JAB), a transaction that will cost about $340 million, or $16.00 per share.

As reported by New York Times, Caribou is the second coffee shop JAB acquired this year, Peet’s Coffee & Tea Inc. (PEET) being the first. JAB also maintains position in cosmetics brand Coty, women designer shoe label Jimmy Choo and consumer goods company Reckitt Benckiser.

Caribou is a small-cap company that has delivered 14.6 percent in market value, year to date, almost as good as coffee titan Starbucks (SBUX), whose market price has appreciated 18.26 percent this year. Caribou’s now fellow JAB-backed brand, Peet’s Coffee, went up 17.2 percent year to date.

Based on the number of coffee houses, Caribou is the second largest company-operated premium coffeehouse in the U.S. Its three operating segments are retail coffeehouses, commercial and franchise.

“Caribou has a fantastic brand and unique culture, and fits perfectly with JAB’s investment philosophy of investing in premium and unique brands in attractive growth categories like coffee,” said Bart Becht, JAB Group chairman. “JAB is committed to investing in Caribou as a standalone business out of Minneapolis to ensure the Company continues its current highly successful track record.”

Gabelli initially acquired Caribou in the third quarter of 2010, with 17,000 shares. The holding didn’t last long; Gabelli sold out of the stock in the following quarter – a quick bet. At the time, he purchased the stock at an average price of $9.84.

Caribou stock was up about 0.05 percent in today’s trading. GuruFocus ranks the company 9 in Financial Strength and 6 in Profitability and Growth.

According to its 10-Year Financials, Caribou has maintained an annual growth rate of 6.99 percent.



Another Guru besides Gabelli who has holding of Caribou is Pioneer Investments. Both Paul Tudor Jones and Jim Simons sold out of the stake in the third quarter.

To view the rest of Gabelli’s latest trades, go to Mario Gabelli’s Stock Picks. Also view his undervalued stocks, his high yield companies and his top growth stocks.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


Rating: 2.8/5 (11 votes)

Comments

Dr. Paul Price
Dr. Paul Price premium member - 1 year ago


Buying shares at $16 for a $16 cash offer doesn't sound like a great move.

Only a sweetened offer could help. A busted deal would be a tragedy.

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