Starbucks to take full control of Japanese unit
It will buy the remaining 60.5% share in a two-step deal worth US$913.5m
[LOS ANGELES] Starbucks Corp on Tuesday said it plans to buy the remaining 60.5 per cent share of Starbucks Coffee Japan Ltd that it does not already own in a two-step deal valued at about US$913.5 million.
Starbucks Japan has operated as a joint venture between Starbucks and its partner Sazaby League since 1995. Over the summer, Sazaby approached the world's biggest coffee chain about selling its ownership stake in Starbucks Japan, Starbucks said in a statement.
There are roughly 1,050 Starbucks cafes in Japan, which Starbucks said will be its second-largest market in terms of revenue from its coffee shops.
Despite Japan's economic difficulties, those shops have profit margins that are among the highest in the world, Starbucks executives said on a conference call with analysts.
Starbucks also has opportunities to add more shops, expand product sales through grocery and food service channels and to boost the company's relatively small share of canned coffee and other ready-to-drink products that are popular in Japan, they added.
Sazaby will begin tendering shares beginning on Sept 26. The purchase price for Sazaby's 39.5 per cent stake is 965 yen (S$11.25) per share, for a total of 55 billion yen. When that transaction is completed, Starbucks will have a controlling 79 per cent interest in Starbucks Japan.
Shortly afterwards, Starbucks will begin to buy the remaining 21 per cent ownership interest held by public shareholders and option holders of Starbucks Japan's common stock for a purchase price of 1,465 yen per share, for a total of 44.5 billion yen.
The public price per share of 1,465 yen represents a premium of 11.6 per cent to the 30-day average price of Starbucks Japan's stock, a 4.7 per cent premium to the closing price on Sept 22, and a 51.8 per cent premium to the price Starbucks is paying Sazaby for its shares, the company said.
All steps in the tender offer process have been unanimously approved by the boards of directors of Starbucks, Sazaby and Starbucks Japan, and the transactions are expected to be fully completed during the first half of 2015, Starbucks said. - Reuters
