Starbucks and Jamba Juice Sounds Like a Nice Combination

I think Starbucks (SBUX) should purchase Jamba Juice (JMBA). They could do so while Jamba (JMBA) remains cheap. I'm thinking out loud, but it could work well.

JMBA became a public company last year through the use of a special purpose acquisition corporation [SPAC] - essentially a shell company that issues shares to the public and later utilizes those funds to buy an operating company. The firm's growth trajectory has just begun, and Starbucks would then possess an entire portfolio of high profit margin beverages and healthy foods. JMBA and SBUX could also continue to exist as separate brands.

It makes a lot of sense to me, but I'm not sure that JMBA wants to sell. Several hedge funds are 5+% shareholders, including George Soros. We'll see what happens, but I'm covering all bases by owning both stock

Comments

[Larry Jeans...:]

Jamba Juice was more or less for sale from about 1998 until Steve Berrard bought it last year. If Starbucks wanted to buy it they would have bought it along time ago. Interestingly, the market cap of JMBA is about double the price that it paid for Jamba Juice though it has no other material assets. Business since the purchase has not been remarkable and the cost of California produce has jumped. (Note this is cocktail napkin math, I have not looked at the name recently)

Jamba Juice is like a contra Starbucks in that the expected market potential for the concept has been shrinking while Starbucks has exceeded even the most wild eyed optimistic expectations for growth.

Though Starbucks jumped yesterday, it remains remarkably cheap by its historic standards. You might consider instead shorting JMBA and staying long Starbucks. Starbucks is not going to buy them ever.

2007 Mar 22 07:56 AM

[Mahesh Reddy:]

I like the JAMBA JUICE...MORE THAN STARBUCKS ....when we look at the stages they are at....based on the expansion plans Jamba, It is supposed to have 30 plus growth rate for a foreseeable future...where as with starbucks they can generate lot of cash from the operations, but the invesment community wants year or year growth not just a good dividend paying stock...

Starbucks will be better off, buying jamba juice and keep its growth engine going.....

Mahesh Reddy

2007 Mar 22 09:24 AM

[Larry Jeans...:]

JMBA just broke the buck. An $0.80 stock ...and Starbucks still hasn't bought them.

Okay, okay...the long SBUX part of my paired trade sucked a big one also just not as much as JMBA sucked.

2008 Oct 03 10:35 AM