Starbucks to Acquire Teavana for $620 Million

SEATTLEStarbucks has entered into a merger agreement to acquire Teavana Holdings, Inc., for approximately $620 million in cash. The transaction, expected to close by the end of the year, will vault the company into a leadership position of worlds second-largest beverage category.

Together, Starbucks and Teavana will jumpstart the next wave of growth in this dynamic category, leveraging Starbucks core competencies of real estate, design and store operations and integrating these with Teavanas world-class tea authority, global sourcing capabilities, merchandising and best-in-class retail store unit economics. Powered by Starbucks existing infrastructure, Starbucks plans to continue to grow and extend Teavanas already-successful 300 mall-based stores, as well as add a high-profile neighborhood store concept that will accelerate Teavanas 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. Teavanas 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."

The companys acquisition of Teavana provides the opportunity to pioneer new retail experience within the rapidly growing $40 billion global tea category. In calendar 2013, Starbucks will integrate its unique assetsincluding its leading position in social and digital media, its 10 million member global loyalty program, card and mobile payment platformswith the Teavana customer experience to expand Teavanas 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 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.