Starbucks Coffee has agreed to buy specialty retailer Teavana for $620m, as part of its plans to grow its tea division Tazo business.
The deal is expected to give the company a two-tiered market position with both the Teavana and Tazo brands through a combination of expertise and assets.
By integrating their core competencies the firms intend to jumpstart the next wave of growth in the rapidly growing $40bn global tea category.
The Seattle-based coffee chain plans to extend Teavana's 300 mall-based stores and add a high-profile neighborhood store concept to expand its presence in markets across North America and around the world.
Teavana, in partnership with Starbucks' existing joint venture partner Alshaya, has recently opened its first store in the Middle East and plans to foray into new, high-consumption tea markets globally in future.
Starbucks chairman, president and CEO Howard Schultz said: "Teavana's 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."
Teavana co-founder and CEO Andrew Mack said: "After growing Teavana for fifteen years, we are thrilled that Starbucks will be able to truly fulfill our mission of bringing premium tea to millions of people on a global platform.
Starbucks channel development and emerging brands president Jeff Hansberry, who will assume leadership of the new subsidiary, said that the deal would enable the company to innovate new products, enter new categories and expand into new channels of distribution.
"Evolution Fresh, La Boulange and now Teavana demonstrate how Starbucks will add brands that strengthen our core offering and create a rich ecosystem of experiences with shared values, mutual efficiencies and complementary characteristics, thus forming tangible examples of the success of the Starbucks Blueprint for Growth and a differentiated health and wellness offering in the marketplace."
The transaction is expected to close by year end, following receipt of regulatory clearances.
