M&A

: Starbucks and Jamba Juice

Abstract

The coffee and snack industry is characterized by the strong competitive environment. Most companies within the industry compete on the price-service basis, as well as on food and beverage quality and diversity. M&A activity has been the strategy followed by the major companies to increase its products offerings, as well as to expand its activities worldwide. The goal of this thesis is to analyze a proposal acquisition for Jamba Juice by Starbucks. The valuation framework applied in this work was the discounted cash-flows and the relative valuation, based on a selected peer group. The valuation of Starbucks conducted in this work implies a undervaluation of 26%, given the closing price in the end of 2014. On the contrary, it is estimated that Jamba’s shares were pricing 15% higher than its fair value. Following conservative estimation of the synergy’s value, it is considered that the acquisition will create value for the shareholders of both companies. The acquisition will be a public cash offer for all Jamba’s shares. The acquisition price is $21,88 per share, which represents a 45% premium over the closing share price on 31 December. It is expected that this acquisition will have a impact of $0,254 per Starbucks share.

Date of Award	2015
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Henrique Miguel Ribeiro Guimarães Bonfim (Supervisor)