Starbucks’ acquisition tear continued last week, when the cash-rich company announced plans to buy Teavana Holdings, a chain of 300 mall-based tea stores.
The $620 million cash deal marks Starbucks’ third acquisition in 13 months.
Starbucks said it expects to add nonmall stores to Atlantabased Teavana’s portfolio and more beverages to its menu.
The news comes f ive months after Starbucks announced it would take its Tazo tea brand into retailing. That brand’s $1.4 million in annualsales now come from grocery and cafe sales.
In addition to Teavana, the company paid $30 million last fall for a California juicery called Evolution Juice, and $100 million in June for a small bakery chain called La Boulange.
Even after years of paying dividends, the coffee company was sitting on $848 million in cash when its fiscal year ended Sept. 30.
Although U.S. consumers traditionally prefer coffee, Starbucks Chief Executive Officer Howard Schultz said they are ready to embrace the tea version of Starbucks. He considers the popularity of readyto-drink tea beverages such as Arizona Tea and Honest Tea to be “a great litmus test.”
Adding more drinks to Teavana’s menu reminds him of Starbucks’ decision in the ’80s to add coffee drinks after years of selling mostly wholebean coffee.
The acquisition, which requires regulatory approval, is expected to close later this year. A majority of Teavana’s shareholders, who would receive $15.50 a share, have already approved the sale.
The deal is expected to add a penny to Starbucks’ earnings per share in fiscal 2013.
Business, Pages 71 on 11/18/2012