Company to purchase remaining 60.5% share of Starbucks Japan in
two-step tender offer process
Acquisition enables continued elevation of unique Starbucks
Experience for customers and partners through coffee, store design and
digital and mobile leadership
Starbucks to build on more than 1,000 existing stores and nearly 20
years of brand loyalty and trust
SEATTLE--(BUSINESS WIRE)--Sep. 23, 2014--
Starbucks Corporation (Nasdaq:SBUX) today announced that it will acquire
the remaining 60.5% share of Starbucks Coffee Japan, Ltd. (Starbucks
Japan) that the company currently does not own through a two-step tender
offer process, further elevating Starbucks growth and innovation in its
second-largest market when measured by retail store sales. The
acquisition positions Starbucks to accelerate growth across multiple
channels in Japan, including the potential introduction of new concepts,
such as Teavana. Before the end of the first quarter of fiscal year
2015, Starbucks expects to have a controlling interest and will
consolidate Starbucks Japan into the company’s results. Starbucks
expects this transaction will be immediately accretive on a non-GAAP
basis when excluding certain items noted later in this release.
Starbucks Japan is a joint venture between Starbucks and Sazaby League
that operates Starbucks branded retail stores in Japan. Since the
inception of their joint venture agreement in 1995, Starbucks and Sazaby
together introduced the coffeehouse experience to Japanese customers and
built one of Starbucks top-performing markets globally. Starbucks
Japan’s business today is marked by strong brand recognition and deep
customer loyalty built through delivering an unparalleled Starbucks
Experience. Starbucks stores have been remarkably consistent
performers despite ongoing macro-economic challenges in Japan.
“Nearly 20 years ago we opened the first Starbucks store outside of
North America in Tokyo’s Ginza district with lines around the block,”
said Howard Schultz, chairman, president and ceo of Starbucks Coffee
Company. “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.”
“We would like to thank all of our partners in Japan who wear the green
apron with pride and deliver the Starbucks Experience to our
customers each and every day,” commented John Culver, group president
China/ Asia Pacific, Channel Development and Emerging Brands. “Their
efforts have built an admired brand and delivered the strong financial
results that have made Starbucks Japan a meaningful contributor to the
growth and profitability in our China/ Asia Pacific segment. We wish
Sazaby the best and sincerely appreciate the operational excellence and
leadership that they have contributed to Starbucks Japan’s success and
the solid foundation they have helped us build for the opportunities
ahead.”
Over the summer, Sazaby approached Starbucks about selling its Starbucks
Japan ownership stake to Starbucks and exiting the business in a smooth
and orderly manner in advance of the expiration of Starbucks Japan’s
retail franchise rights. Starbucks credits Sazaby with establishing and
growing Starbucks Japan’s healthy business and is excited for this next
chapter in Starbucks Japan’s evolution which will leverage existing
infrastructure, systems and expertise to continue disciplined retail
growth and expanded presence in other channels.
“It has been an honor for Sazaby to be part of the Starbucks family for
nearly two decades,” said Masatoku Mori, President and Representative
Director, Sazaby. “We are deeply grateful for the opportunity we have
had to introduce the Starbucks Experience and the world’s best
coffee to Japan. We have full confidence that Starbucks will continue to
care for our dedicated partners, loyal customers and neighboring
communities with the same personalized attention and respect they’ve
provided since opening our first Starbucks store in 1996.”
The first step in the two-step tender offer process begins with Sazaby
tendering its shares, which will commence on September 26th.
The purchase price for Sazaby’s 39.5% stake is ¥965 per share, for a
total of ¥55 billion, or approximately $505.0 million with Japanese Yen
converted into US Dollars at a reference conversion rate of 108.93 JPY
to USD. Upon final settlement of this first tender offer step, which is
anticipated to occur during the middle of Starbucks first quarter of
fiscal 2015, Starbucks will own a controlling 79% interest in Starbucks
Japan.
Shortly after the settlement of the first step in the tender offer and
following the release of Starbucks Japan’s second quarter earnings
results, Starbucks will initiate the second step for the remaining 21%
ownership interest held by public shareholders and option holders of
Starbucks Japan’s common stock. The tender offer purchase price for this
second step is ¥1,465 per share, for a total of ¥44.5 billion, or
approximately $408.5 million at the above referenced conversion rate.
The public price per share of ¥1,465 represents an 11.6% premium to the
30-day average price of Starbucks Japan’s stock, a 4.7% premium to the
closing price on Monday, September 22, and a 51.8% premium to the price
Starbucks is paying Sazaby for its shares.
All steps of this tender offer process have been unanimously approved by
the boards of directors of Starbucks, Sazaby and Starbucks Japan, and
the transactions are expected to be fully completed during the first
half of calendar 2015.
The consolidation of Starbucks Japan’s financial results into Starbucks
financials will commence after the final settlement of the first step of
the tender offer, at which time Starbucks will record the required
purchase accounting adjustments, such as the step-up in fair value of
Starbucks existing ownership interest in Starbucks Japan, as well as
newly acquired tangible and intangible assets. This information will be
included in Starbucks first quarter of fiscal 2015 externally reported
financial results.
Financial targets for Starbucks fourth quarter and fiscal year 2014
provided in conjunction with Starbucks 2014 third quarter earnings on
July 24th are unchanged as a result of this transaction.
Starbucks expects this transaction to be slightly accretive to the
company’s fiscal year 2015 non-GAAP financial results, when excluding:
1) an anticipated acquisition-related gain in the first quarter of
fiscal 2015 resulting from a fair value adjustment of Starbucks current
39.5% ownership interest in Starbucks Japan; 2) ongoing amortization
expense of significant acquired intangible assets related to the
transaction; and 3) transaction and integration costs.
The English translation of the press release issued by Solar Japan
Holdings G.K., an indirect wholly-owned subsidiary of Starbucks that
will acquire the shares and options, will be available later today on
Starbucks website at http://investor.starbucks.com.
The English translation of the tender offer explanatory statement will
be available on September 26, 2014 at http://investor.starbucks.com.
The offering documents will be available in Japanese on September 26,
2014 at http://www.smbcnikko.co.jp/stock/tob.
Webcast Information
Howard Schultz, Starbucks chairman, president and ceo, and Troy Alstead,
chief operating officer, will host a webcast today at 3 pm PDT to
discuss this acquisition. The webcast may be accessed on the Investor
Relations page of Starbucks website at http://investor.starbucks.com,
where it will also be archived until October 21, 2014.
About Starbucks
Since 1971, Starbucks has been committed to ethically sourcing and
roasting high-quality arabica coffee. Today, with stores around
the globe, the company is the premier roaster and retailer of specialty
coffee in the world. Through our unwavering commitment to excellence and
our guiding principles, we bring the unique Starbucks Experience
to life for every customer through every cup. To share in the
experience, please visit us in our stores or online at www.starbucks.com.
About Starbucks Japan
Starbucks Japan was formed as a joint venture partnership in 1995 with
license agreements that grant it the exclusive right to develop and
operate Starbucks coffee stores in Japan, and to use certain trademarks,
designs, marks, technologies, and know how. With more than 1,000 stores
today, Starbucks Japan employs approximately 25,000 partners. Earlier
this year, Sazaby approached Starbucks about their interest in selling
their Starbucks Japan ownership stake and exiting the business. As
stated in Starbucks Japan’s securities filings, the existing license
agreements are set to expire on March 31, 2021 and contain no provision
for auto-renewal.
Important Notice
This press release is not, and does not constitute any part of, an offer
to sell or purchase, or a solicitation of an offer to sell or purchase,
any securities.
The tender offers will be conducted in accordance with the procedures
and information disclosure standards prescribed by Japanese law, which
may differ from the procedures and information disclosure standards in
the United States. In particular, Section 13(e) and Section 14(d) of the
U.S. Securities Exchange Act of 1934 and the rules prescribed thereunder
do not apply to the tender offers, and the tender offers do not conform
to those procedures and standards.
Forward-Looking Statements
Certain statements contained herein are “forward-looking statements”
within the meaning of the applicable securities laws and regulations.
Generally, these statements can be identified by the use of words such
as “anticipate,” “expect,” “believe,” “could,” “estimate,” “feel,”
“forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,”
“will,” “would,” and similar expressions intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. These statements are based on
information available to Starbucks as of the date hereof, and Starbucks
actual results or performance could differ materially from those stated
or implied, due to risks and uncertainties associated with its business.
These risks and uncertainties include, but are not limited to, the
failure of the parties to consummate the two-step tender offer due to
commercial, regulatory or other reasons, as well as general economic and
industry factors such as coffee, dairy and other raw material pricing
and availability, successful execution of internal performance and
expansion plans, fluctuations in U.S., Japanese and other international
economies and currencies, the impact of initiatives by competitors, the
effect of legal proceedings, and other risks detailed in the Company’s
filings with the Securities and Exchange Commission, including the “Risk
Factors” section of Starbucks Annual Report on Form 10-K for the fiscal
year ended September 29, 2013. The Company assumes no obligation to
update these forward-looking statements.
(C) 2014 Starbucks Coffee Company. All rights reserved.
Source: Starbucks Corporation
Starbucks Corporation
Investor Relations:
JoAnn
DeGrande, 206-318-7118
investorrelations@starbucks.com
or
Media:
Marianne
Duong, 206-318-7100
press@starbucks.com