Green Mountain Coffee Roasters Inc. (GMCR) Friday said it acquired Canadian coffee maker, Timothy's Coffees of the World, Inc. from an affiliate of Sun Capital Partners, Inc. for about $157 million in cash. Green Mountain anticipates the acquisition to be accretive to earnings in fiscal year 2010 and has also revised its first quarter and full year estimates to reflect the change.
The acquisition will provide Waterbury, Vermont-based Green Mountain an opening into the Canadian market along with a coffee roasting facility in Toronto, and also expects to accelerate its geographic expansion on the new Canadian Platform.
The acquisition adds Timothy's World Coffee brand and its wholesale business to the roster of Green Mountain, while the retail portion of the Timothy's brand across Canada will continue to held by Bruegger's Enterprises, Inc., with which Green Mountain has signed a five-year coffee supply agreement. Currently, Green mountain effects supplies to all of Bruegger's 290 locations in US.
Green Mountain said it would maintain the acquired business as a wholly owned Canadian subsidiary, with operations integrated into Green Mountain's special coffee business.
Commenting on the acquisition, Lawrence Blanford, President and Chief Executive Officer of Green Mountain said, "We believe that Timothy's, along with our Green Mountain Coffee brand, will contribute meaningfully to our future success in Canada and throughout North America."
"Timothy's wholesale business and brand is a landmark international acquisition for GMCR - representing the accomplishment of a key goal: to further optimize the Keurig opportunity and our family of brands across North America," Blanford added.
As per the revised estimates for the first quarter of 2010 reflecting the Timothy's acquisition, Green Mountain now expects earnings in the range of $0.12 to $0.16 per share, up from the prior range of $0.11 to $0.15 per share. In the prior year, Green Mountain recorded earnings of $0.37 per share and non-GAAP earnings of $0.10 per share, excluding the impact of the $17 million or $0.26 per share Kraft patent litigation settlement.
For fiscal year 2010, Green Mountain now projects earnings in the range of $1.85 to $1.95 per share, up from prior estimates of $1.75 to $1.85 per share. Total consolidated net sales growth is now estimated to be in a range of 55% to 60%, up from prior estimates of 50% to 55%.
On average, analysts polled by Thomson Financial currently expect earnings of $1.82 per share on revenues of $1.23 billion for the year. Analysts' estimate typically excludes one-time items.
Earnings estimates include $14 million pre-tax or $0.18 per share non-cash amortization expenses related to company's acquisitions.
Based in Toronto, Ontario, Timothy's is a premium coffee company producing specialty coffee, tea and other beverages in a variety of packaged forms. Since 2000, Timothy's was also a licensed roaster of Keurig, Inc., a wholly owned subsidiary of Green Mountain.
GMCR is currently trading at $68.70, up $0.35 or 0.51%, on a volume of $0.94 million shares. In the last 52-week period, the stock traded in the range of $18.03 to $94.50, with a three-month average volume of 1.34 million shares.
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