Peet's to buy Diedrich Coffee for $212 mln

* Says deal values Diedrich at $26/shr

* Says deal to enter single-cup coffee mkt

* Deal to help earnings after 2010

* Peet's shares fall 4 pct, Diedrich stock up 23 pct

Nov 2 (Reuters) - Gourmet coffee chain Peet's Coffee & Tea Inc (PEET.O) agreed to buy Diedrich Coffee Inc (DDRX.O) in a $212 million cash-and-stock deal, to enter the fast growing single-cup coffee market.

The deal values Diedrich at $26 a share, a premium of 28 percent over its Monday closing price of $20.36.

Diedrich, a wholesale coffee roaster and distributor, makes and sells K-Cup refills for Green Mountain Coffee Roasters Inc's (GMCR.O) single-cup Keurig brewer system through a licensing agreement.

Under the deal, Peet's will acquire Diedrich's portfolio of brands including Diedrich Coffee, Coffee People and the single-serve rights to the Gloria Jean's coffee brand.

Peet's said it will finance the acquisition through a combination of cash on hand and $140 million of debt financing.

The acquisition, expected to hurt earnings in 2010 and add to profit thereafter, is scheduled to close by the end of 2009.

Shares of Peet's were down 4 percent at $33.18, while those of Diedrich were up 23 percent at $25.14 in trading after the bell. (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Anne Pallivathuckal)