Starbucks Corporation (NASDAQ:SBUX) and the Sazaby League began the joint venture in 1995 the year before the chain opened its first in location in the Ginza of Tokyo. The Sazaby League presently holds 60.5 of the shares in Starbucks’ Japan but Starbucks will purchase that for $913.5 million in two stages. After the announcement, Starbucks’ shares rose nearly 5% immediately on the Tokyo market.
The Sazaby partnersip
Though Starbucks Corporation (NASDAQ:SBUX) started with its single location in Tokyo, that expanded rapidly with the company now having over 1,000 stores throughout the country and employs over 25,000 people. Japan is also Starbucks’ second-largest retail market and the coffee chain is still adding locations nearly every week. The Sazaby League apparently approached Starbucks about selling its shares earlier this summer. The brand owner was not interested in renewing its license to operate the stores if Starbucks was willing to buy its stake.
“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, Starbucks chief executive, said.
The company has seen its revenues double over the last ten years while its profits have gone more than fivefold over the same time period.
Starbucks Corporation (NASDAQ:SBUX) first fiscal quarter runs through December and by that time it will hold 79% of the company with the remaining shares scheduled to be transferred by the end of the second quarter. The purchase is being made between the two installments at a 12% premium over the 30-day average share price.
Starbucks’s Asia expansion
Despite the fact that Japan is the company’ second largest retail market, Asia only accounts for 6% of total Starbucks’ sales. This is, however, something that Starbucks’ wants to build on as the company focuses on international expansion.
The coffee chain has yet to open any of its tea stores run under the Teavana brand in Japan.
Starbucks Corporation (NASDAQ:SBUX) on the Nasdaq is presently (2:10PM EDT) trading at $75.01 up $1.06 or 1.43%.
