Starbucks Corporation has announced entry into a definitive agreement to acquire the remaining 50 per cent share of its East China (East China JV) business from long-term joint venture partners, Uni-President Enterprises Corporation (UPEC) and President Chain Store Corporation (PCSC) for approximately US $1.3 billion in cash consideration in the largest single acquisition in the company’s history.
Starbucks will assume 100 per cent ownership of approximately 1,300 Starbucks stores in Shanghai and Jiangsu and Zhejiang Provinces, building on the company’s ongoing investments in China, its fastest-growing market outside of the United States in terms of store count.
Concurrently, UPEC and PCSC will acquire Starbucks 50 per cent interest in President Starbucks Coffee Taiwan Limited (Taiwan JV) and assume 100 per cent ownership of Starbucks operations in Taiwan for approximately US $175 million.
Founded in 1997, the Taiwan JV currently operates approximately 410 Starbucks stores in Taiwan.
“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 President and CEO, Starbucks Coffee Company, Kevin Johnson.
Johnson added, “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. This is a critical next-step as we advance our multifaceted China growth strategy for long-term profitable growth in Asia.”
East China is a significant and strategic region for Starbucks in China, with Shanghai containing nearly 600 stores, the largest number of stores globally of any city where Starbucks has a presence. In December 2017, Shanghai will also be the first city outside of the United States to welcome the opening of the ultra-premium Starbucks Reserve™ Roastery.
“This is the beginning of yet another exciting new chapter for Starbucks in China. 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 CEO, Starbucks China, Belinda Wong.
Wong added, “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.”
“We’ve had a strong friendship with Starbucks for nearly 20 years, starting with the opening of the first store in Taiwan and then further extending our partnership with the opening of the first store in East China,” said Chairman, Uni-President Enterprises Corporation, Alex Lo.
Lo added, “We are confident that our new ownership model and continued collaboration with Starbucks will enable us to be even more focused on delivering an elevated Starbucks Experience to our customers in the Taiwan market.”
Starbucks will discuss the financial impact of these transactions during its third quarter fiscal year 2017 earnings conference call. Both transactions are expected to close by early calendar year 2018 and are subject to customary closing conditions, including receipt of required regulatory approvals.