Starbucks, Green Mountain ink deal, but it's not an acquisition

After weeks of heavy speculation about whether Starbucks would buy Green Mountain Coffee Roasters — chatter so intense that it sent the Vermont firm's stock to an all-time high — the companies have announced something short of an acquisition.

• Starbucks will put its coffee and tea into single-serve pods that fit into Green Mountain's popular Keurig brewing machines, as Tully's Coffee and other roasters have done for years. Until now, Starbucks made single-serve discs solely for a brewing system marketed by Kraft, with which Starbucks has parted ways.

• Starbucks stores will sell the Keurig machines, which cost roughly $100 to $250. Keurig has the vast majority of the single-brewer market, with some estimating its share as high as 80 percent.

The news sent Starbucks' shares up $3.43, or 9.9 percent, to $37.97 Thursday. The stock also set a new 52-week high in interday trading of $38.21.

Green Mountain investors were even more thrilled — sending shares up $18.07, or 41.4 percent, to $61.71 — after having had hopes for an acquisition dashed weeks ago when Starbucks said in a news release that just having a patent did not ensure the Vermont company's continued primacy in the $2 billion single-serve category.

One analyst suggested Starbucks was playing games with that release.

"We are amused at the public battles Starbucks finds the need to wage when it cannot get its way in private negotiations," wrote Janney Capital Markets analyst Mitchell Pinheiro, who covers Green Mountain but not Starbucks.

Fewer than 20 percent of Starbucks' U.S. customers own a single-cup brewer, Starbucks said Thursday in announcing the new arrangement.

It is unclear whether other brands of coffee will continue to be offered for Keurig brewers.

"Starbucks is the exclusive, licensed super-premium coffee brand produced by [Green Mountain] for the Keurig Single-Cup brewing system," the release said.

David Tarantino, a Peet's Coffee analyst with Robert W. Baird, wrote to clients that the agreement appears to lock Peet's out of doing a deal with Green Mountain. Now Peet's will have to find another partner or wait until the Keurig system's patents expire, he wrote, which could be in late 2012.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com