Starbucks Corporation (SBUX), Whole Foods Market, Inc. (WFM): In Hindsight, These Acquisitions May Be Genius

Tea it up
Teavana is the most recent of the “big three” deals and probably raised the most eyebrows considering the size of the transaction at more than $600 million in cash. Given that tea itself is seen as a $40 billion opportunity, it’s understandable that management would at least consider it. Particularly because Starbucks has already done so well with Tazo Tea. In short, the Teavana acquisition will bring hundreds of new stand-alone Teavana stores across the country in addition to the 300 mall-based locations that are already out there today.

Management is currently developing a “prototype” tea bar in New York and once it feels it has cracked the code in doing for tea what it’s done for coffee, it will then begin revamping all the mall-based stores and adding tea bars to every one of those as well as potentially introducing Teavana products in Starbucks stores.

Making sense of it all
At the time, there were many questions about Starbucks and the acquisitions it was making. But looking at it in hindsight, the picture is much clearer as to where management’s working to take this business: health and wellness, food and tea. It’s as simple as that. Of course, there are still plenty of skeptics out there, but I’m not one of them. Even with its terrific run of late, I think this company is going to do some serious growing over the coming decade.

The article In Hindsight, These Acquisitions May Be Genius originally appeared on Fool.com is written by Jason Moser.

Jason Moser owns shares of Starbucks. The Motley Fool recommends and owns shares of Starbucks and Whole Foods Market.

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