Coffee giant makes a blockbuster deal in China

Starbucks Coffee Company has closed the biggest transaction in its history.



The coffee giant is buying the remaining 50% share of its East China business from long-term joint venture partners, Uni-President Enterprises Corporation and President Chain Store Corporation. The deal is worth approximately $1.3 billion (USD) — the largest single acquisition in the company’s history, according to Starbucks.



Through the transaction, the retailer will assume 100% ownership of approximately 1,300 Starbucks stores in Shanghai and Jiangsu and Zhejiang Provinces — a move that builds on the company’s ongoing investments in China. Specifically, the deal puts Starbucks on pace to meet its goal of operating more than 5,000 stores by 2021.



“Unifying the Starbucks business under a full company-operated structure in China reinforces our commitment to the market, and is a firm demonstration of our confidence in the current local leadership team as we aim to grow from 2,800 to more than 5,000 stores by 2021,” said Kevin Johnson, president and CEO, Starbucks Coffee Company.



According to Starbucks, China is the chain’s its fastest-growing market outside of the United States in terms of store count. In East China alone, the chain operates nearly 600 stores in Shanghai, the largest number of stores globally of any city where Starbucks has a presence.



In December, Shanghai will also be the first city outside of the United States to welcome the opening of the ultra-premium Starbucks Reserve Roastery. This concept store, which debuted in Seattle in late 2014, will be dedicated to roasting, brewing and packaging rare, small-batch Starbucks Roastery Reserve coffees from around the world. http://www.chainstoreage.com/article/coffee-giant-open-massive-location-chicago



“Full ownership will give us the opportunity to fully leverage our robust business infrastructure to deliver an elevated coffee, in-store third place experience and digital innovation to our customers, and further strengthen the career development opportunities for our people,” said Belinda Wong, CEO, Starbucks China. “Our East China partners’ relentless pursuit of operational excellence and leadership has provided us a solid foundation to maximize the unprecedented growth opportunities ahead and we look forward to extending our world-class network of unique programs to support their personal and professional dreams.”



In a separate deal, UPEC and PCSC will acquire Starbucks’ 50% interest in President Starbucks Coffee Taiwan Limited (Taiwan JV) for $175 million, giving the companies 100% ownership of Starbucks operations in Taiwan. The deal is worth $175 million. Taiwan JV currently operates approximately 410 Starbucks stores in Taiwan.



“Similar to our decision in 2011 to fully license our Hong Kong and Macau market operations, we are pleased to transition our business in the Taiwan market to our long-time partners Uni-President Enterprises Corporation and President Chain Store Corporation, both highly-recognized local operators, as we continue to grow in Taiwan,” Johnson added. “This is a critical next-step as we advance our multifaceted China growth strategy for long-term profitable growth in Asia.”



Both deals will close in early 2018.