Starbucks Corporation Sells Tazo Tea for $384M

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Starbucks Corporation (NASDAQ:SBUX) is selling its Tazo Tea brand to Unilever plc (ADR) (NYSE:UL) for $384 million.

Starbucks Corporation Sells Tazo Tea for $384M

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The sale of the Tazo Tea brand to Unilever plc (ADR) will include all of its recipes, inventory and intellectual property that currently belongs to Starbucks Corporation. UL says that the acquisition will strengthen its tea portfolio and push it to closer to high growth segments.

Unilever plc (ADR) notes that the acquisition price for the Tazo Tea brand represents 10 times its pro forma EBIT. The brand pulled in $112.5 million in revenue over the last year and UL believes that there is room for more growth.

“With its strong appeal to millennials, TAZO® is a perfect strategic fit for our US portfolio,” Kees Kruythoff, President of Unilever North America, said in a statement. “TAZO®’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity.”

Unilever plc (ADR) says that Tazo Tea has a focus on specialty offerings, such as black, green and herbal teas. It points out that the specialty tea market currently makes up 48% of the at-home tea category. Trends also show that the specialty tea segment is likely to become more prominent in the future.

The deal between Starbucks Corporation and Unilever plc (ADR) will need regulatory approval and to finish customary closing conditions before it can be completed. The two companies are expecting the deal to close in the fourth quarter of the year.

SBUX stock was up 3% and UL stock was up slightly as of noon Friday.

As of this writing, William White did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/11/starbucks-corporation-is-selling-tazo-to-unilever/.

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