Starbucks to take full ownership of Japanese operations

Starbucks would take full ownership of its Japanese operations for over $900 million, a move it said was aimed at further tapping its second-largest market.

According to the Seattle-based company, it would buy a 60.5-per cent stake that it did not already own as part of a two-step tender process expected to be completed by the first half of 2015.

Japan was the first overseas destination for Starbucks when it expanded from the US in 1996.

The news, announced yesterday, sent Starbucks Coffee Japan shares up 4.50 per cent to 1,462 yen on the Jasdaq start-up market this morning.

The Japan business, which launched in 1996 and now had over 1,000 locations, and is a joint venture between Starbucks and Sazaby League, a Tokyo-based firm operating a wide-range of brands from sundries and apparel to food and beverages services.

The deal would see Starbucks buy Sazaby's 39.5-per cent stake for $505 million, and then move to acquire the balance 21 per cent held by other investors at a price of 1,465 yen per share, totalling of $408.5 million.

According to Starbucks, the deal was aimed at further tapping the major market, including the possible launch in Japan of its Teavana tea chain.

"The acquisition positions Starbucks to accelerate growth across multiple channels in Japan, including the potential introduction of new concepts," the company said in a statement.

The company's stores in Japan employing over  25,000 people, had so far held up against a recent downturn in the economy and this month, the unit raised its annual profit forecasts.

Under the deal Starbucks would acquire 60.5 per cent stake of the Japanese unit that it did not own and hoped to complete the deal by the end of the year.

Japan was Starbucks' second biggest market in terms of sales and had some of its most profitable cafes, BBC reported.

In a statement, Howard Schultz, chairman of Starbucks Coffee Company said, "Nearly 20 years ago we opened the first Starbucks store outside of North America in Tokyo's Ginza district with lines around the block.

"Japan is a market we know well and care deeply about, with more than 25,000 partners serving millions of customers every week at more than 1,000 stores."

Taking full ownership of the coffee chain would see Starbucks get the opportunity to expand its product sales through grocery stores and other outlets, according to commentators.

The company currently held a small market share for its canned coffee and other ready-to-drink products in Japan.