Starbucks has just made its largest-ever acquisition, paying $100m for San Francisco-based Bay Bread.  The acquisition is part of Starbuck’s strategy of diversifying its product offering and boosting the importance of food at its 17,400 outlets worldwide.

Bay Bread owns the La Boulange brand, which means that pastries and other bread products will now be sold alongside “Via” instant coffee, a number of juice offerings and an increased number of food choices.

According to a report in Bloomberg:

“La Boulange bakery operates 19 retail stores in the San Francisco area and sells its products in restaurants, hotels and grocery stores, according to the statement. Besides selling the bakery’s food in Starbucks cafes, Starbucks will expand La Boulange locations nationwide.”

Bay Bread is Starbucks’ largest acquisition to date, surpassing its 1998 takeover of Seattle Coffee Co., a UK based coffee chain, for $81 million (a transaction I advised Seattle Coffee Co management on - great fun at the time!).

It follows another recent takeover - in 2011 Starbucks bought juice company Evolution Fresh and announced plans to open a whole new chain of stand-alone juice and sandwich shops.

Will shareholders welcome the takeover of Bay Breads? Has Starbucks paid too high a price for the deal? Time will tell, but Starbucks shareholders have enjoyed a significant improvement in shareholder value since Howard Schultz returned as CEO in early 2008. Schultz started implementing his turnaround plan in 2009 and since then Starbucks’ share price has risen by over 500%. I suspect they will give him the Board the benefit of the doubt on the takeover.

I’ll let Schultz end this blog entry with his own take on the strategic motives behind the takeover of Bay Bread: he is quoted at the announcement:

“After more than 40 years, we will be able to say that we are bakers too,”

SBUX Chart

SBUX data by YCharts

Featured
Exam coaching workshops

AQA BUSS1/BUSS2 Combined Exam Coaching & Revision Workshops

These intensive one-day exam coaching & revision workshops are designed to help AS Business students maximise their performance in the BUSS1 & BUSS2 exams later this term. Through a series of intensive sessions, we focus on and build techniques that enable students to meet the assessment objectives. The main focus on each session is BUSS2, but we'll also dip into key BUSS1 topics and develop effective exam technique proven to work for both exams.

Learn more ›

Teaching & learning products

AQA BUSS3 Revision Guide

The leading quick revision guide for BUSS3. This 20 page full colour guide provides a concise overview on the key knowledge that students need to apply to the BUSS3 exam case study together with advice on exam technique.

£4.00

AQA BUSS1 Revision Guide

Our 20 page quick revision guide to all the key topics for AQA AS Business Studies Unit 1 (BUSS1). Enables students to cover the all the essential knowledge quickly. Also includes extensive advice on applying the theory to the BUSS1 exam studies.

£4.00