| NEW YORK
NEW YORK Dec 19 A hedge fund with a 4 percent
stake in Caribou Coffee Co on Wednesday urged the
company to pursue a better deal after it agreed to be sold to
Germany's Benckiser group for $340 million, saying it is easily
worth double that price.
Accretive Capital Partners LLC of Madison, Connecticut, said
in a letter to the company's board that it was dismayed by the
price of $16 per share that Caribou announced on Monday. Reuters
obtained a copy of Accretive's letter
"We are baffled by the board's and management's decision to
sell the company now and to do so without the benefit of
engaging a qualified investment banker who would market the
company and manage an efficient auction process," Rick Fearon,
Accretive's managing partner, said in the letter.
Fearon said in an interview with Reuters other shareholders
agreed with his position that Caribou was underpriced, but he
was not at liberty to name them.
GAMCO Investors Inc and affiliates of the investment
firm run by billionaire investor Mario Gabelli took a 2.53
percent stake in Caribou this week, buying half their shares at
about $16 each, according to a regulatory filing on Wednesday.
Caribou closed at $16.05 on Wednesday, after climbing as
high as $16.64 on news of the sale on Monday. The stock closed
at $12.32 last Friday, before the announcement.
Plans to boost average store sales by two-thirds and to
accelerate new store openings are imminent growth drivers at
Caribou, yet management opted to sell Caribou at a price based
on past sales, Fearon said.
"One can only guess what kind of incentives Benckiser
offered to our management team to consummate this deal," he
Because it was late on Wednesday, Caribou officials had not
responded to a Reuters request for comment on Accretive's
Caribou agreed to be sold at half the value that Benckiser
paid for Peet's Coffee & Tea two months ago, said Fearon, who
has held Caribou shares for five years.
Caribou was sold at 0.9 times annual sales and at less than
11 times trailing operating income, compared with Peet's
purchase price of 2.4 times sales and 21 times trailing earnings
before interest, taxes, depreciation and amortization, he said.
"As measured by these real-time metrics, Caribou Coffee is
worth $30-$35 per share, especially considering the control
premium a strategic buyer must pay to enjoy operational
synergies," Fearon said in the letter.