Starbucks’s (NASDAQ:SBUX) made its $620 million acquisition of specialty loose-leaf tea retailer Teavana Holdings (NYSE:TEA) with the intention of strengthening its product base, but the coffee company may have bought itself a dud.
In a press release announcing the purchase the company stated, “Just as Starbucks pioneered a new retail experience for coffee and espresso, the company’s acquisition of Teavana provides the opportunity to do the same with the rapidly growing $40 billion global tea category.”
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The deal made sense for Teavana as well; before Starbucks’s intended purchase was made public, shares had been trading around $10, and the stock was on a downward trend. Over the last year, the company’s stock price has lost more than 50 percent of its value. However, shares rose close to 60 percent, reaching a high of $16.06 on November 14 after the agreement was finalized.
But Teavana might not be the purchase that Starbucks thought it was. Glaucus Research Group reported on Tuesday that independent laboratory tests have shown that Teavana’s teas contain more pesticides than U.S. and European Union regulatory limits allow. Not only is the pronouncement shocking given Starbucks’s well-advertised commitment to ethical sourcing, but also given Teavana’s own statements.