Starbucks to acquire Teavana for US$620 million

Starbucks Coffee Company announced on 14 November that it has agreed to acquire Teavana Holdings, Inc. in an all-cash acquisition, for around US$620 million.  Teavana is a specialty retailer with 300 company-owned stores, and retailing available on its website.   Powered by Starbucks existing infrastructure, Starbucks said it 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 in a statement. “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.” In calendar 2013, Starbucks said it will integrate its assets – including its leading position in social and digital media, its 10 million member global loyalty program, card and mobile payment platforms – with the Teavana customer experience to expand Teavana’s current mall-based store footprint with a comprehensive design strategy that will include new Teavana neighborhood locations in markets across North America and around the world. Teavana recently opened its first store in the Middle East in partnership with Starbucks existing joint venture partner Alshaya, and has plans to enter new, high-consumption tea markets around the world in the years ahead. Starbucks has entered into a merger agreement with Teavana to acquire Teavana for an aggregate acquisition price of approximately US$620 million in cash and said it expects the acquisition to be accretive to earnings by approximately $0.01 per share in fiscal year 2013, based off of the previously announced earnings targets. Teavana stockholders of record will receive $15.50 per share in cash in the merger which will result in Teavana becoming a wholly-owned subsidiary of Starbucks. Stockholders of Teavana holding approximately 70 per cent of the outstanding shares of common stock have approved the merger agreement by written consent, and the closing is expected to occur by year end, following receipt of regulatory clearances.