Is a Starbucks-Green Mountain Partnership in the Works?

(Starbucks-Green Mountain partnership report updated with news of Starbucks agreement with Courtesy Products.)
SEATTLE ( TheStreet) -- Starbucks ( SBUX) may soon be partnering with Green Mountain Coffee Roasters ( GMCR) as it looks to enter the single-cup coffee market now that its 12-year arrangement with Kraft Foods ( KFT) is coming to an end.

Starbucks told news outlets over the weekend it plans to announce a new product for the single-serve coffee market "in the near future." On Monday, unnamed sources close to the talks spoke with Reuters, telling the newswire that Starbucks and Green Mountain were indeed in partnership negotiations, but would not specify the nature of an agreement.

Amid all the speculation, Green Mountain shares surged 6.6% on Monday, but were 4% lower in at midday Tuesday, trading around $44.51. Starbucks shares, meanwhile, closed higher by 0.7% on Monday and were half a point lower on Tuesday at $33.39.

Starbucks on Tuesday announced it reached a distribution agreement with Courtesy Products, a privately held provider of in-room coffee service to hotels across the U.S.

The Seattle-based coffee shop behemoth already sells individual instant coffee packets under its Via brand, but speculation among analysts has mounted that Starbucks is poised to push more aggressively into the single-cup brewing market now dominated by Green Mountain's Keurig machines and K-Cup portion packs .

Under the agreement with Courtesy Products, Starbucks will provide ground coffees for use in Courtesy's patented CV1 in-room and on-demand brewed coffee system in up to 500,000 luxury and premium hotel rooms across the U.S.

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