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Starbucks to pay $626 million to acquire Teavana

For many of us here in Fairfax, "Starbucks" is synonymous with "coffee." But for its part, Starbucks is setting its sights higher. To wit, it recently made its largest-ever acquisition by agreeing to pay $626 million for Teavana.

Teavana, which was founded in Atlanta in 1997, makes prepared tea and sells premium loose-leaf teas and tea equipment, like teapots and teacups. It sells its products through other retailers but also has storefronts in what Starbucks considers to be valuable markets.

This acquisition will help Starbucks gain more traction in the retail world and will likely help it penetrate markets in India and China, where customers prefer tea to coffee.

Over the past few years, Starbucks has made several acquisitions to gain footholds in the markets for pastries, bottled beverages and convenience items. It has also made a bid for customers outside of its stores with products like instant coffee and bagged coffee, which can be purchased at grocery stores and discount retailers like Target. Tellingly, it changed its name from "Starbucks Coffee" to just "Starbucks" last year.

The acquisition of Teavana is expected to be complete by the first quarter of next year.

As this goes to show, acquisitions and mergers can often help companies expand into new markets or take their businesses in new directions. Because of this, they're often very important affairs that must be handled carefully and thoroughly. Mergers and acquisitions are too important to be treated hastily or without care.

Source: The San Francisco Chronicle, "Starbucks Teavan Deal Shows Why It Isn't All About Coffee: Retail," Nov. 15, 2012

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