Starbucks takes full control of China stores in $1.3 bn deal
SHANGHAI - Agence France-PresseU.S. coffee chain Starbucks has announced it will take full control of its mainland China outlets in a $1.3 billion deal, the largest single acquisition in the company’s history.
It will buy the remaining 50 percent of its East China joint venture from Taiwan’s food and beverage giant Uni-President, according to a company statement issued on July 27.
Starbucks will gain full control of 1,300 stores in 25 cities, including commercial hub Shanghai, from Uni-President Enterprises and a subsidiary, the statement said.
Starbucks has seen rapid expansion in China, where it opened its first cafe 17 years ago. By 2011, the company had 400 outlets while today it has nearly 600 in Shanghai alone.
Kevin Johnson, Starbucks chief executive, described the move as “a critical next step” that can help fulfil its goal of almost doubling the number of its mainland outlets to 5,000 from the current 2,800.
“Unifying the Starbucks business under a full company-operated structure in China reinforces our commitment to the market,” Johnson said in the statement.
Chairman Howard Schultz, who stepped aside as Starbucks chief executive earlier this year, has said that China could one day become the chain’s largest market, overtaking the US where it has some 7,500 stores.
The move comes as the U.S. coffee giant saw a 8.3 percent drop in net earnings on the year, to $691.6 million, for the third quarter ended on July 2, according to its earnings report.
The company plans to close 379 Teavana tea shops due to poor performance, it said.
The Seattle-based firm also said it will fully license its Taiwan market operations, selling 50 percent of its Taiwan joint venture President Starbucks Coffee for $175 million to Uni-President.
Starbucks fully licensed its Macau and Hong Kong stores in 2011.
The new deals are expected to be closed by early 2018 and are subject to regulatory approvals.