Starbucks to buy full control of Japan unit for $914 million

Starbucks to buy full control of Japan unit for $914 million

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The Japan unit of Starbucks will be fully owned by the US coffee maker.

International coffee chain Starbucks has announced its plans to buy the remaining 60.5 percent share of Starbucks Coffee Japan in a two-step deal for $914 million on September 23, 2014. A joint venture between Starbucks and Sazaby League since 1995, the Japanese unit has about 1,050 cafes in the country, comprising the second largest market for revenue making from its coffee shops. 

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The profits from the company’s Japanese cafes have been the highest in the world despite economic challenges in the country.  With this move and potential profit margins, Starbucks may also expand its cafe reach further in Japan, encashing on higher sales through grocery and food service channels. This will also serve as a good opportunity for the company to propel sales of its canned coffee and other ready-to-drink products that have found popularity in Japan.

Sazaby’s share tender will begin on September 26, 2014, pegging the partner’s purchase price for 39.5 percent stake at 965 yen per share, which is about $505 million. On completion, Starbucks will own a controlling 79 percent interest in Starbucks Coffee Japan.

Following that, the company will buy the remaining 21 percent from public shareholders and option holders of the Japanese unit’s common stock for a purchase price of 1,465 yen per share, amounting to $408.5 million.

The tender has been unanimously approved by the boards of directors of Starbucks, Sazaby and Starbucks Coffee Japan. The transactions will come full circle during the first half of 2015.

Photo Credits: The Epoch Times