Teavana Acquisition Attracts Opportunists

ATLANTA, GA

A deal the size of Teavana’s $620 million sale to Starbucks Coffee Co. often draws opportunists.

This week, two law firms and The Shareholders Foundation, a settlement claim filing service, announced they would sue to block the deal.

On Nov. 14, Starbucks announced that it had reached agreement with 70 percent of Teavana Holding’s stockholders to purchase the company for $15.50 per share. Stockholder rights attorneys and the Shareholders Foundation have since called the all-cash offer too low and threatened court action, citing analysts that valued the stock at $20 or more per share.

Last week, Glaucus Research, a short seller with a vested interest in Teavana's stock price declining,  also sought to influence the share price with a report alleging high concentrations of pesticide in samples it had tested by a German laboratory. The 59-page report alleged 100 percent of Teavana’s tea contained pesticide residues but did not reveal the name of the laboratory that did the tests nor did it say the concentration of pesticide residue was harmful to humans. Glaucus acknowledged upfront that it would benefit financially from a drop in the listed share price. The firm hopes to trigger a sell off. It then sold its shares.

The Atlanta-based retailer said there is no basis in the report and countered, stating “Teavana’s teas are tested by third party laboratories… only the highest quality teas are accepted.”

“Teavana’s buyers source globally from reputable growers and blenders,” a Teavana spokesperson told World Tea News. “Testing is performed by third-party laboratories in accordance with international standards, and Teavana representatives regularly visit suppliers.”

Each batch of teas is tested using international food safety standards including European Union regulations, which are widely considered to be the most stringent in the world, according to the company.

In a prepared release, Teavana writes that it “refutes the report’s conclusions. The group that published the report is a short-seller and may benefit financially from the allegations in the report.”

Glaucus Research Group was founded in January 2011. Its principal is Matthew Wiechert of San Diego. Glaucus has released six sell reports on publicly-traded companies. It is not registered with FINRA (a professional association of financial analysts and researchers). The company was previously accused of “deliberately misleading and manipulative practices”

“We believe the Glaucus report was filed with the intent to benefit a few select parties, while significantly harming a class of individuals and firms (the LLEN shareholders),” concludes the September 2011 article by private investment company T Squared Capital titled: Glaucus’ Web of Lies and Their Attempt to Deceive L&L Energy Shareholders.

In a follow up released Wednesday, Glaucus responded to critics and concluded “Teavana also deceived Starbucks, its prospective acquirer, regarding the quality of its teas and that Starbucks would therefore likely walk away from the deal.”

Glaucus offered additional detail about its testing methodology: in the home that investors and consumers will perform their own pesticide tests on Teavana’s teas.”

Starbucks has shown no indications it will walk. The company’s stock price declined when the deal was announced but have increased a full percent since the Glaucus report was released.

Dan Ritter at Wall Street Cheat Sheet points to the fact that shares of Teavana stock “had clearly been struggling, with shares tumbling over 42 percent this year to date before the deal was announced.”

He writes that the Glaucus report “took about 60 cents off the stock’s price and it has leveled off around there.”

“The concerns raised by the report are definitely worth keeping in mind, but there does not seem to be a reason for panic selling,” he advised.

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