Starbucks Corp. is buying the rest of its East China joint venture in a $1.3 billion transaction, marking the biggest deal ever for a company that sees Chi
NEW YORK – Starbucks Corp. is buying the rest of its East China joint venture in a $1.3 billion transaction, marking the biggest deal ever for a company that sees China as a huge growth opportunity.
The Seattle-based coffee chain will acquire the remaining 50 percent of the business from partners President Chain Store Corp. and Uni-President Enterprises Corp. Starbucks also is divesting its 50 percent stake in a separate joint venture in Taiwan, according to a statement Thursday.
The move underscores Starbucks’ bet that China will be one of the company’s top sales drivers in coming years. It’s wagering that the nation’s growing middle class and urbanization will give it a huge population of potential coffee drinkers to tap.
The deal mirrors the company’s strategy in Japan, where Starbucks entered the country with a joint venture, spent time learning the local market and then brought the business back in house, said Jennifer Bartashus, an analyst at Bloomberg Intelligence. In 2014, Starbucks agreed to buy out its Japanese joint venture with Sazaby League and other partners for about $913.5 million.
“With the level of expectations they have for China, it isn’ t really a surprise that they want to exert as much control over the stores as possible, ” Bartashus said.
Starbucks shares gained as much as 1.9 percent at $59.03 in New York on Thursday. The stock had climbed 4.4 percent this year through the close of trading on Wednesday.
