NEW YORK ( TheStreet) -- Mergers are like weddings: everyone is happy on the big day. And so it was during yesterday's festivities. Starbucks (SBUX) announced a takeover of La Boulange, a San Francisco-based bakery chain, and the media stood for the bride, dabbed at their eyes with their hankies at all the right spots and cooed that the two will live happily ever after.
And who knows? They might be right. But there are some clear issues to consider and The Wall Street Journal was one of many media outlets that did a comically insufficient job in that regard. If you spot a single difference between the Journal's article "Starbucks Buys a Bakery, and Baker, for $100 Million" and Starbucks' press release, in which the coffee giant vouches for its own strategic brilliance, do tell.
The Journal, for example, passed along Shultz's press release quote that: "'after more than 40 years, we will be able to say that we are bakers too."
But Starbucks just emerged from a period of time -- the Starbucks Dark Ages -- in which, by Howard Schultz's own account, the stores lost focus, in part because they strayed into food to compete with the likes of McDonald's (MCD) and Panera Bread (PNRA) and Dunkin' Donuts (DNKN). Now? More food. And that's a good thing? Moreover, Starbucks can only heat up food in their stores; they can't bake it. Is Starbucks merely going to deliver fresh bakery? Is it even fresh then?The Journal even trumpets another Starbucks boast about creating a "national artisanal bakery brand." But national and artisanal? Isn't that a contradiction? Nevermind. It's a wedding day. Look: Europe is imploding, so perhaps Starbucks should be concentrating their efforts and cash on salvaging business there.
Also, with recent moves into alcohol, juice and now food, Starbucks might be saying something about the limited future of coffee. In less than 140 characters, CNBC's @herbgreenberg was able to lay down the appropriate note of caution there: "its recent diversifications suggests coffee has peaked," he Tweeted. Reacting ahead of time, he added, is "better than being blindsided," but it still signifies risk ahead. Perhaps no one would want to invite @herbgreenberg to a wedding, but he's a good guy to have in the aisles at a merger.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV