Starbucks buy Teavana for $620 million?
The World’s largest coffee shop operator, Starbucks, is looking into expanding its business beyond the coffee sector. Yesterday, Starbucks Corp. announced an agreement to buy tea store chain, Teavana Holdings Inc., for about $620 million. Starbucks is willing to pay Teavana investors $15.50 per share in cash.
Starbucks has already bought the Tazo Tea brand in 1999. Over the years, Tazo Tea sales generate about 1.4 billion per year. With the evidences of Tazo Tea and recent buying of Teavana, there is definitely a popularity trend of tea as a beverage. Tea is the second most consumed beverage in the world. According to Starbuck’s presentation, this $40 billion global market is growing at around 10% per annum. I personally believe that Starbucks’ purchase of Teavana is clearly a great move. This addition not only provides an increase of 1.7% in Starbuck’s annual revenues, it also has the potential to expand rapidly. One opportunity is for Starbucks to expand into China or India for future growth, as reports have shown that both countries have middle classes that drink more tea than coffee. Starbucks could also increase cross selling of Starbucks goods with Teavana, and as a result, boost tea beverage sales in Teavana’s stores across the nation.
http://www.bloomberg.com/news/2012-11-14/starbucks-to-buy-teavana-for-620-million-to-add-tea.html
