Starbucks Coffee Co. has agreed to acquire Teavana Holdings Inc. in an all-cash acquisition for $620 million. Together, Starbucks and Teavana will grow the tea category by leveraging Starbucks core competencies of real estate, design, and store operations and integrating these with Teavana’s tea authority, global sourcing capabilities, merchandising, and retail store unit economics. Starbucks plans to continue to grow and extend Teavana’s 300 mall-based stores as well as add a high-profile neighborhood store concept that will accelerate Teavana’s domestic and global footprint.
“We believe the tea category is ripe for reinvention and rapid growth. The Teavana acquisition now positions us to disrupt and lead, just as we did with espresso starting three decades ago,” said Howard Schultz, Starbucks Chairman, President and CEO. “Teavana’s world-class tea authority, coupled with the romance and theater of the retail experience that is the heart and soul of Starbucks heritage, will create a differentiated customer experience and business opportunity that delivers immediate value to shareholders. This complements our existing Tazo brand and gives us the unique opportunity to create a two-tiered market position.”
Starbucks investment in Teavana is matched by its commitment to continue to grow the Tazo business—giving Starbucks a two-tiered market position for tea. Starbucks plan is to define a new elevated platform of tea experience and education, and for both the Teavana and Tazo brands to grow and complement one another while at the same time elevating the entire category through a combination of expertise and assets.
The closing is expected to occur by the end of 2012.