Farmer Bros. to swallow up coffee rival for $45 million

Both brands are served throughout Southern California in restaurants, mini-marts, hotels and institutional food establishments such as hospitals.

The $45-million purchase from food giant Sara Lee Corp. would give Torrance-based Farmer Bros. annual revenue of about $500 million, a large roasting plant in Houston and a distribution and spice facility in Oklahoma City.

"This is a once-in-a-lifetime opportunity for Farmer Bros.," said Chief Executive Rocky Laverty, who is working to transform the nearly 100-year-old Southern California coffee roaster from a family-operated business to a national provider.

"In this deal I can take care of 10 years of work very quickly," Laverty said.

He said the purchase would allow the company to operate in all Lower 48 states instead of just the 31 where it now has business, expanding the reach of its coffee, tea and spice lines, as well as leveraging expenses and operations over a much larger sales network.

"Big chains want national coverage if they are going to do business with Farmer Bros.," Laverty said.

Sara Lee said earlier this year that it planned to sell the portion of its coffee business that it calls U.S. Direct Store Delivery Foodservice. The division had revenue of $228 million during the 2008 fiscal year. Sara Lee will hold on to its Douwe Egberts and Java Coast brands -- about $400 million worth of business.

But Sara Lee plans to concentrate on selling those brands through large wholesalers and food suppliers rather than maintaining a distributor network itself. Farmer Bros. has an agreement to distribute Egberts coffee to its clients.

"We are simplifying our business. There are a lot of brands out there, and we decided to keep just those two brands," said Mike Cummins, spokesman for Downers Grove, Ill.-based Sara Lee.

Laverty said the deal would give Farmer Bros. about 20,000 additional customers, 60 sales offices and a fleet of vehicles to serve the expanded business.

In addition to Superior Coffee, Farmer Bros. would pick up the Cain's, Ireland, Justin Lloyd, McGarvey, Metropolitan, Prebica, Suntipt (U.S. only), Wechsler, Cafe Royal and Royal Kona coffee brands from Sara Lee.