Starbucks Purchases Tea Company Teavana

Starbucks-buys-TeavanaIn an effort to exert further its presence as the only place to drink, Starbucks announced plans this morning to purchase the tea company Teavana.  Teavana is a local and online presence that shows people the wonders of herbal teas.  After their initial start in Atlanta, Georgia, Teavana has expanded to over 250 stores in malls across North America.  Starbucks and Teavana actually partnered earlier this year to open a store in Kuwait and have seen remarkable success.

Starbucks plans to buy Teavana Holdings Inc. and then replicate the success of Starbucks.  Part of their plan is to create stand-alone storefronts and also create tea bars at existing Teavana locations.  Starbucks Chief Executive Howard Schultz is excited about the opportunity to build on an existing brand.  Starbucks itself started from meager beginnings; the first store was located inside a different store in Seattle.  “We will do something very similar over time with Teavana,” said Schultz, currently overseeing 18,000 Starbucks stores around the world. “We will do for tea what we did for coffee.”

That bet is in large part why Starbucks was willing to pay $620 million in cash for Teavana.  All told the coffee giant paid $15.50 per share which amounted to a 54% increase on the closing cost of Teavana on Tuesday.  The news of the acquisition sent shares of the company sky-rocketing to close at $15.45 today.  Analysts are saying that this purchase is the smartest in the history of Starbucks acquisitions.  “The valuation was great for this kind of fast-growing retailer,” said Sharon Zackfia from William Blair & Co, adding that the economic picture at Teavana is “exceptional” and proven in every market in the United States.

Buying a business is not as easy as making a press release.  Attorneys on both sides had to make business valuations and the required due diligence for the deal to move forward without a hitch.  The review will alert both sides as to the current holdings of each company and the overall financial health of each business.  If you require an attorney’s assistance in the purchase or the sale of your business, contact a skilled business law lawyer in Naperville today with over thirty years of experience.