Black and White Program

Starbucks expands its footprint yet again

November 16th, 2012 by Black and White Program Staff

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Starbucks is into tea, and sees its growth and profits linked to it. So much so that the coffee giant has announced plans to purchase Teavana $TEA, in a deal that is reportedly the biggest acquisition they have ever done. At $15.50 a share, the purchase totals $620 million in cash, over 50% of Teavana’s recent stock price.

Starbucks has been concentrating on growth via acquisitions of food related and beverage firms. Last year the company purchased a maker of high end premium juice, Evolution Fresh, for $35 million, along with its $100 million acquisition of Bay Bread, a producer of high-end baked goods. With its sights on the tea market, believed to be valued at $40 billion, Starbucks may pursue other tea related firms to expand its offerings and revenue base. The acquisition pares well with its existing Tazo brand, a lower tier product than Teavana’s offerings. Teavana’s retail stores are located primarily in shopping malls, and Starbucks may expand the base of its 300 stores.

The deal, reportedly agreed upon by all parties, including Teavana’s upper management, is expected to be completed by the end quarter of 2012.

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