Starbucks Corp. (NASDAQ: SBUX) has announced that it will acquire the rest of Starbucks Japan. The stake that this coffee giant is looking to reacquire is roughly 60.5%. The company plans to buy Starbucks Japan through a two-step tender offer process, a move that the company says will further elevate growth and innovation in its second-largest market. This acquisition is said to position Starbucks to grow across multiple channels in Japan. As far as the total size, this is said to cover more than 1,000 stores in Japan.
Starbucks Japan is a joint venture between Starbucks and Sazaby League that operates Starbucks branded retail stores in Japan. Starbucks stores were represented as having performed consistently despite ongoing macro-economic challenges in Japan. This summer, Sazaby approached Starbucks about selling its ownership stake to Starbucks and exiting the business before its retail franchise rights expire.
The first step in the two-step tender offer involves Sazaby tendering its shares starting on September 26. The total stake owned by Sazaby is 39.5%, which will be sold at 965 yen per share, converting to the U.S. dollar at 108.93 JPY to USD. Then Starbucks will make the second step and acquire the remaining 21% interest held by the Japanese public for 1465 yen per share.
Starbucks will be paying the equivalent of $505 million in the first step and $408.5 million in the second step. For a comparison of the more than $900 million combined, Starbucks has a market cap valued at $55.55 billion.
Howard Schultz, chairman, president and CEO of Starbucks, commented on the acquisition:
Nearly 20 years ago we opened the first Starbucks store outside of North America in Tokyo. 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. Full ownership of Starbucks Japan enables us to build on the amazing foundation of customer trust and loyalty our partners have achieved by continuing to take care of our people, delivering the highest quality coffee and innovating in product, store design and the digital experience.
Starbucks closed at $73.96, and it has a consensus price target of $90.32. Its 52-week trading range is $67.93 to $82.50.