Starbucks (SBUX, Financial) is one of the best coffee makers in the world. The company comparable - store and total net sales increased 6% to 7%. In the third quarter 2014, the company of $4.2 billion in revenues setting a record. Also Starbucks clearly has pricing power, since the company has raised prices on several in-store beverage. The last revision was an increase of $0.05 -$0.20 and a additional one dollar increase to the prices of its package coffee the company sells in grocery stores. Starbucks has announced that it will acquire the 60.5% of Starbucks Coffee Japan (STBJF, Financial) that the firm doesn't own from JV partner Sazaby League in a two-stage deal valued at YEN $99.5 Billion or ($913 million).
Starbucks Coffee Japan (STBJF, Financial)
It started as a partnership with Starbucks and Sazaby League. The company began with a single location in Tokyo in 1995; it has grown to over 1,000 stores throughout Japan and employs 25,000 peaple. Japan is Starbucks' second-largest retail market, and the firm is adding locations nearly every week. Sazaby League approached Starbucks about selling its shares to Starbucks earlier this summer. The company wasn't interested in renewing its brand license to operate the stores if Starbucks was willing to buy its stack in Starbucks Coffee Japan.
Howard Schultz, Starbucks' chief executive said, “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,”
Over the last decade Starbucks Coffee Japan has seen its revenues double and its profits have increased fivefold. The company has had rapid growth in Japan as other franchises have faced difficulty in overseas markets.
Tender offer
Starbucks will pay Yen $965 per share for Sazaby's 39.5% stake. Once the deal has closed, then a tender will be launched for the 21% stake held by public shareholders/option holders at a price of Yen $1,465, a 4.7% premium to Monday close price. The deal is expected to close in the first quarter of 2015.
In closing
Starbuck's Asian market only makes up 6% of company sales, and Starbucks is starting to focus more on Asian markets. With Starbucks acquiring full control over Coffee Japan, it is clear that the company is focusing on expanding its revenues and profits. The acquistion will increase Starbucks' revenues, sales and its profits; I just don't know how much of an increase the company will see.
