Starbucks to Purchase East China Joint Venture for $1.3 Billion, the Company’s Biggest Acquisition Yet

joint venture

Before it released its quarterly report after trading hours on July 27, Starbucks Corp. (NASDAQ:$SBUX) announced that it will be buying the remaining 50% stake in its East China joint venture. The company will do so by buying the rest of its stocks from joint venture partners Uni-President Enterprises (TPE:$1216) and President Chain Store (TPE:$2912). The acquisition, which will cost the well-known cafe chain $1.3 billion, will be Starbucks’ biggest one yet. Besides the acquisition, Starbucks will be selling its 50% ownership of its Taiwanese joint venture to Uni-President and President Chain for around $175 million.

China is Starbucks’ most rapidly growing market besides the United States. Shanghai alone has about 600 Starbucks locations – the most in any city, according to Reuters – and the company is still looking for ways to expand. By 2021, Starbucks plans to open more than 5,000 locations in China.

Starbucks’ acquisition of its East China venture will give the company full ownership of around 1,300 Starbucks locations in Shanghai, Jiangsu, and Zhejiang. “Full ownership will give us the opportunity to fully leverage our robust business infrastructure to deliver an elevated coffee, in-store experience and digital innovation to our customers, and further strengthen the career development opportunities for our people,” Starbucks China chief executive Belinda Wong said of the purchase.

Both the purchase of its East China joint venture and the sale of its Taiwanese joint venture are expected to be completed by early 2018. Specifics on how the deals could impact Starbucks’ future growth and earnings will be discussed during the company’s third quarter conference call with its investors and analysts later on today.

Featured Image: Depositphotos/© jewhyte

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