Peet's Coffee & Tea on Monday raised for the second time in two weeks its cash-and-stock offer to buy Diedrich Coffee Inc.

Gourmet coffee chain Peet's is now offering to buy Diedrich at $32.50 a share, slightly higher than the $32 per share it offered last Monday.

Earlier this month, Peet's agreed to buy Diedrich for $26 per share, but Diedrich said last Wednesday that a rival bid from Green Mountain Roasters Inc was more attractive.

Diedrich makes and sells K-Cup refills for Green Mountain Coffee's single-cup Keurig brewer system.

Emeryville, California-based Peet's said 2010 net earnings would be between 70 cents and 80 cents per share, should the deal go through. The deal would help boost earnings in 2011 and beyond, Peet's said in a release.

The company said 2011 earnings are expected to be between $2 and $2.11 per share, should the deal be accepted.

Diedrich shares fell 38 cents to $33.12 and Peet's shed 37 cents to $32.56 in Monday trading on the Nasdaq.

(Reporting by Deepa Seetharaman; editing by Carol Bishopric)

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