Teavana slides after short-seller says Starbucks may walk from deal

theflyonthewall.com

Specialty tea retailer Teavana (TEA), which has recently agreed to be acquired for $620M or $15.50 per share by Starbucks (SBUX), is sliding after a firm with a disclosed short position said the deal could be jeopardized by allegations of consumer fraud at Teavana. Glaucus Research Group claimed in a note to investors earlier today that independent laboratory tests it had commissioned indicated that Teavana's teas contain pesticides in amounts that exceed regulatory limits set by the U.S. and European Union. According to Glaucus, Teavana's marketing practices violate federal and state laws against deceptive marketing and the firm believes Starbucks is likely to walk away from the agreed upon deal once the "inevitable" lawsuits against Teavana begin. Glaucus disclosed in its note, "We are short sellers. We are biased...(But) just because we are biased does not mean that we are wrong." In mid-morning trading, shares of Teavana slid 53c, or 3.43%, to $14.90.

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