Is Starbucks Thirsty for More Coffee?

Since Thursday, seven bids have been made for the bankrupt coffee chain Tully’s, with Starbucks (NASDAQ:SBUX) offering to purchase approximately half of the smaller company’s stores.
The who’s who of Tully’s bidders:
As bids for the Seattle-based chain were submitted to its owner TC Global, the company’s attorneys, and its unsecured creditors rather than to a bankruptcy court, the names of interested buyers are not publicly available. However, The Seattle Times was informed of Starbucks’ potential offer through anonymous sources familiar with the company.
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Actor Patrick Dempsey’s investment group, Global Baristas, was also reported to have filed a bid to purchase all 47 company-operated stores. According to The Seattle Times’ sources, his group had the most lucrative offer, but the exact amount is unknown.
Kachi Partners of Colorado offered to pay $4.3 million for the company, including the assumption of certain liabilities, in November, and Tully’s Acquisition Group, Direct Media Systems, Big City Ventures, and a Tully’s Philippines-based franchisee AgriNurture have also expressed interest.
These seven companies will bid in an auction for Tully’s on Thursday, and a judge will decide on January 11 whether to accept the offer preferred by the coffee company and its creditors.
If Starbucks’ bid is chosen, it is unclear what will happen to the remaining locations.
CHEAT SHEET Analysis: Will this potential acquisition be a positive catalyst for Starbucks?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. Tully’s, with its 47 stores in Washington and California, would bolster Starbucks’ presence on the West Coast and add to the company’s growing list of acquisitions, which includes recently-purchased Teavana (NYSE:TEA). As competition remains high in the coffee-shop industry, Starbucks has looked to support its flagship coffee brand with specialty items like Evolution Fresh juices and snacks and its home-brewer challenge to Green Mountain Coffee Roasters (NASDAQ:GMCR), the Verismo. However, with the company’s more than 12,000 U.S. stores, its Tully’s purchase would be only a minor expansion.
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