The deal: Starbucks acquires Teavana for $620 million
TEAVANA
Founded: 1997
Headquarters: Atlanta
Outlets: 300 stores, website
Product: 100 varieties of premium loose-leaf teas, tea-related products
CEO/Founder: Andrew Mack
In a move designed to help the company do for tea what it’s done for coffee, beverage giant Starbucks announced Wednesday it is buying Atlanta-based Teavana.
The Seattle coffee company, hoping to become a bigger player in the $40 billion global tea category, confirmed rumors it was acquiring the 15-year-old mall-based Atlanta tea chain. Starbucks will pay about $620 million in cash for Teavana in a merger deal for which Teavana stockholders will receive $15.50 per share.
The acquisition, which has been approved by shareholders, is expected to close by the end of the year.
“We believe the tea category is ripe for reinvention and rapid growth,” Howard Schultz, Starbucks’ chairman, president and chief executive officer, said in a release. “The Teavana acquisition now positions us to disrupt and lead, just as we did with espresso starting three decades ago.”
The announcement sent Teavana’s stock skyrocketing Wednesday, up 52 percent to close at $15.45 a share.
“Being part of Starbucks will give us access to incredible industry knowledge and know-how as well as the financial strength to super-charge our business and allow us to continue our rapid growth to the benefit of all our supporters, including our dedicated employees worldwide,” Andrew Mack, the founder and chief executive officer of Teavana, said in a prepared statement.
Mack, a former restaurant industry executive, founded Teavana with his wife Nancy as a single outlet on Peachtree Road in 1997. The company sells more than 100 varieties of premium loose-leaf teas, teawares and other tea-related merchandise through 300 company-owned stores and on its website. It opened its 300th U.S. store in October and its first overseas store in Kuwait on Nov. 5.
“It’s exciting that Teavana has successfully grown from a small company in Atlanta, starting with just one store, to being the world’s most recognized brand in tea,” Mack said.
The company touts its retail experience, including providing consumer education about teas, and said it donates about 1 percent of annual net profits to the Atlanta-based charitable organization CARE.
Mack used his life savings for the venture and the company grew rapidly. It went public in August 2011, with Mack ringing the bell at the New York Stock Exchange.
The company has struggled a bit lately. Teavana lost $146,000 in the second quarter of this year, which it blamed on costs associated with becoming a public company and its acquisition of Canadian tea retailer Teaopia earlier this year.
Teavana is not Starbuck’s first purchase of an Atlanta company. Starbucks paid $72 million in cash in 2003 for the U.S. and Canadian stores of Seattle’s Best Coffee and Torrefazione Italia Coffee, which were owned by Atlanta-based AFC Enterprises.
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