Driven by a fresh buy Monday by European coffee giant Luigi Lavazza SpA, shares of Green Mountain Coffee Roasters Inc, based in Waterbury, added another 4.4 percent overnight as its stock has rebounded in recent weeks. This latest reversal of fortunes seems to add just another aria in what has become an Italian opera for GMCR over the last year. Its shares opened at $31.68 Tuesday and finished at just over $32. The stock was also buoyed by the announcement last Thursday that GMCR was adding a "wellness" line of K-Cup offerings for its single-serve Keurig machines.
GMCR finalized a $250 million deal with Lavazza in January 2011 to jointly develop a new single-serve espresso machine and associated capsules. Lavazza on Monday announced (dated August 30) that it has increased its stake to 6.8 percent of GMCR, or 10.5 million shares, up from 7.7 million. By agreement with GMCR, Lavazza is able to buy up to 15 percent of the company.
Lavazza had sold some of its GMCR stake earlier in the year, which helped compound a steep drop in stock price. GMCR, which was selling as high as $115.98 a year ago, had fallen to as low as $17.11 this past summer.
GMCR client and rival Starbucks is also working on an espresso system with German-based Krueger GmbH & Co, which is slated to be available by the end of this year. The GMCR/Lavazza espresso machine was not expected to be available until after GMCR's fiscal year closes in early November.
GMCR's stock had fallen on "short-sellers" suggesting the stock was over-valued, that expiring patents this year would cause it to lose market share from cheaper competition, and because of corporate governance and accounting issues. On top of that, founder Robert Stiller was removed as chairman of the board because of a stock call, caused by his use of GMCR shares as collateral on outside investments combined with the loss of share value. Former Lead Director William Davis, also demoted earlier this year for similar reasons, resigned from the board in August. Stiller remains on the board.
Analysts and bloggers generally were unsure whether this advance by GMCR would be long-term or short-term.
Source: SEC documents, GMCR, Vermont Business Magazine.