Green Mountain Coffee Roasters Acquires Timothy’s Coffees of the World

Nov 19, 2009 9:40 PM  By

Green Mountain Coffee Roasters received an extra dose of caffeine on Nov. 13 when it announced its acquisition of the coffee brand and wholesale operations of Toronto-based Timothy’s Coffees of the World. Green Mountain paid $157 million in cash for the company, which had been an affiliate of private equity firm Sun Capital Partners.

Waterbury, VT-based Green Mountain Coffee Roasters will operate Timothy’s as a wholly owned Canadian subsidiary with operations integrated into the company’s specialty coffee business unit. Green Mountain had purchased Tully’s Coffee in September 2008.

Timothy’s nearly 100 retail locations throughout Canada were not part of the acquisition. Bruegger’s Enterprises, which is also owned by Sun Capital, purchased the retail portion for an undisclosed amount.

Chris Kampe, a managing director with investment firm Tully & Holland, says the highly visible Sun Capital tends to invest in special opportunities or distressed deals, implements some sort of turnaround, and “flips” the asset two years later.

Sun Capital sold Timothy’s roughly 18 months buying it. Kampe says this is a different strategy than most private equity groups, which seek to hold businesses for four to six years. “Sun’s quick exit of this investment is very typical of its short investment hold strategy.”

Green Mountain has been doing well with its Keurig coffee dispensers and K-cups, Kampe says, and Timothy’s provides GMCR with a Canadian brand and platform for expansion in Canada. Timothy’s also has packaging capacity and a coffee roasting facility in Ontario.