On the 27th, E-Mart, a subsidiary of Shinsegae Group, announced that it would acquire an additional 17.5% stake in Starbucks Coffee Korea from Starbucks Coffee International, the headquarters of Starbucks in the United States. The acquisition price is 474.2 billion won.
Starbucks Coffee Korea is a 50/50 joint venture established by E-Mart and Starbucks Coffee International in 1999.
With this additional acquisition, E-Mart will own a 67.5% stake in Starbucks Coffee Korea, including a 50% stake. The remaining 32.5% of the stake will be acquired by GIC, Singapore’s sovereign wealth fund, for long-term investment purposes.
Starbucks Coffee Korea, which started as Korea’s first Ewha Womans University branch in 1999, has grown into a representative coffee brand in Korea with 1,580 stores nationwide and sales of 1.92 trillion won last year. Both the number of stores and sales are currently the fifth highest among countries where Starbucks operates. E-Mart will continue to operate Starbucks in Korea in the same way even after the acquisition of the stake. We take the current 100% direct store operation method and do not recruit franchisees. Customer service and staff treatment will remain the same. The acquisition is expected to help raise E-Mart’s corporate value. This is because Starbucks’ earnings are 100% reflected in E-Mart’s consolidated financial statements as Starbucks Coffee Korea is incorporated as an affiliate of E-Mart through the additional stake acquisition. The Starbucks headquarters in the US takes only brand royalties and product prices such as coffee.
Shinsegae is expected to promote the listing of Starbucks Coffee Korea together with GIC. It is reported that the GIC, which needs to recover its investment, agreed to have the right to recover after a certain period of time, such as listing on Starbucks Coffee Korea.
An investment banking (IB) industry official said, “While positively evaluating the growth potential and listing potential of Starbucks Coffee Korea, the contract did not include call options and rights to sell together that could cause disputes.” We made an effort to go public for recovery, and after a certain period of time, we agreed that GIC would have the relevant rights.”
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