Starbucks Corp. share price down, buys remaining 61% stake in Japan division

Starbucks Corp., the biggest coffee-shop chain in the world, revealed that it had reached an agreement over the acquisition of the remaining 61% stake in its Japanese operations for $913.5 million.

The acquisition will include purchasing a 40% stake from Sazaby League for $505 million and a 21% stake held by public investors for $408.5 million.

“We will be positioned to accelerate growth in a market that offers tremendous opportunity for us,” Troy Alstead, CFO, Starbucks, said on a webcast. The companys statement also said the acquisition would provide it with the opportunity to introduce new concepts in Japan, such as its chain of tea locations called Teavana.

The Japanese operations of Starbucks have been managed by Sazaby League since the joint venture was founded in 1995. The first store was open in 1996 and after that the U.S.-based company became quite popular in the region. Over the past ten years the Japanese joint ventures sales increased more than two times, while its profit rose more than five times. The rapid growth in Japan came at a time when some overseas franchise companies were dealing with viability problems in a highly competitive market.

“Full ownership of Starbucks Japan enables us to build on the amazing foundation of customer trust and loyalty our partners have achieved by continuing to take care of our people, delivering the highest quality coffee and innovating in product, store design and the digital experience,” Howard Schultz, CEO, Starbucks, said.

Starbucks Corp. was 0.86% down to close at $73.96 per share yesterday, marking a one-year change of -1.86%, and valuing the company at $55.56 billion. According to the Financial Times, the 22 analysts offering 12-month price forecasts for Starbucks Corp. have a median target of $90.00, with a high estimate of $99.00 and a low estimate of $80.00. The median estimate represents a +21.70% increase from the last price of $73.96.