Starbucks already owns the Tazo tea brand, which it bought in 1999. It sells Tazo products in its stores and to other retailers and will move into the tea store format with the Teavana acquisition.
Teavana, based in Atlanta, operates 300 mall-based stores.
Starbucks said Wednesday that it plans to expand Teavana's existing network of stores and add shops outside of malls as well. Starbucks CEO Howard Schultz said that the tea category is "ripe for reinvention and rapid growth".
Teavana shareholders will get $15.50 per share cash in the deal, which is expected to close by the end of the year. Starbucks says it will add a penny per share to its 2013 earnings.
Starbucks has focused its recent acquisitions on products outside of its core coffee business. It bought small bakery chain La Boulange in June for $100 million and fresh juice maker Evolution last year for $30 million.
Teavana shares jumped by $5.33, or 52.6 percent, to $15.46 in afternoon trading. Starbucks shares fell $1.42, or 2.8 percent, to $48.89.
(Copyright 2012 by The Associated Press. All Rights Reserved.)