Royal Cup Coffee & Tea has struck an all-cash deal to acquire fellow US roaster and distributor Farmer Brothers Coffee.
Under the agreement, Royal Cup will buy all the outstanding shares in publicly listed Farmer Brothers for $1.29 each.
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Both companies supply tea and coffee to retail and foodservice customers.
Farmer Brothers said its board has “unanimously” approved the deal and recommended its shareholders to vote in favour.
In July last year, the company started a process to explore “strategic” options focused on “maximising” shareholder value.
The deal, meanwhile, comes after Royal Cup secured investment from private equity firm Braemont Capital in December to drive its expansion.
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By GlobalDataChip Wann, the president and CEO of Royal Cup, said: “This transaction will allow Royal Cup and Farmer Brothers to combine our complimentary capabilities and build a more resilient national organisation with the infrastructure and products necessary to better support our growing customer base across multiple channels.”
The deal is expected to close in the second quarter, subject to the approval of Farmer Brothers’ shareholders and other customary closing conditions.
John Moore, the president and CEO of Farmer Brothers, said: “Bringing together more than 250 years of coffee expertise, it allows us to enhance our manufacturing and production capabilities, expand our already industry-leading nationwide distribution network, create even greater economies of scale and ultimately better serve our customers.”
Established in 1912, Farmer Brothers’ customer base includes small independent eateries and foodservice providers, as well as restaurant chains, department stores, and hotels.
The company also supplies grocery chains with private-label coffee, and consumer-branded coffee and tea products.
Meanwhile, Royal Cup has a presence across the US, Mexico, and the Caribbean.
With roots dating back to 1896, the company was originally founded by Henry T. Batterton as the Batterton Coffee Company and renamed in 1950 as Royal Cup Coffee after its purchase by William E. Smith.
