US-based coffee retailer, Starbucks, has agreed to acquire specialty tea retailer Teavana for $620m to expand its Tazo business.

The deal is expected to give the company a two-tiered market position in the tea segement of the beverage market – with Teavana and Tazo brands through a combination of expertise and assets.

Starbucks Coffee plans to extend Teavana’s 300 mall-based stores and add a high-profile neighborhood store concept to expand its presence in markets across North America and around the world.

Starbucks chairman, president and ceo Howard Schultz said that the company believes the tea category is ripe for reinvention and rapid growth.

"Teavana’s world-class tea authority, coupled with the romance and theater of the retail experience that is the heart and soul of Starbucks heritage, will create a differentiated customer experience and business opportunity that delivers immediate value to shareholders," Schultz added.

Teavana co-founder and CEO Andrew Mack said, "After growing Teavana for fifteen years, we are thrilled that Starbucks will be able to truly fulfill our mission of bringing premium tea to millions of people on a global platform.

Starbucks channel development and emerging brands president Jeff Hansberry, who will assume leadership of the new subsidiary, said that the deal would enable the company to innovate new products, enter new categories and expand into new channels of distribution

Teavana, in partnership with Starbucks’ existing joint venture partner Alshaya, has recently opened its first store in the Middle East and plans to foray into new, high-consumption tea markets globally in future.

The chain offers more than 100 varieties of premium loose-leaf teas, authentic artisanal teawares and other tea-related merchandise through 300 company-owned stores.