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Starbucks makes biggest-ever acquisition in China Starbucks to own 100% of China stores after record deal
(about 1 hour later)
Starbucks is buying out its joint venture partners in China for $1.3bn (£994m), marking the coffee chain's biggest-ever acquisition. Starbucks is to take full ownership of all its China outlets, after agreeing to buying out its joint venture partner for $1.3bn (£994m).
The all-cash deal will see Starbucks buy the remaining 50% stake it does not already own, in the firm's fastest-growing market outside of the US. The deal will see it acquire the 50% stake it does not already hold in 1,300 stores in Shanghai as well as the provinces of Jiangsu and Zhejiang.
It will then gain full control over 1,300 stores in the Chinese provinces of Shanghai, Jiangsu and Zhejiang. Starbucks already fully owns the other 1,500 outlets in China - its fastest-growing market outside of the US.
The announcement was made ahead of its quarterly profit release on Thursday. The coffee giant said the buyout was its biggest-ever acquisition.
Starbucks said net income fell 8.3% to $691.6m for the three months to July, which only just matched market expectations. The announcement came as Seattle-based Starbucks announced net income fell 8.3% to $691.6m for the three months to July - only just matching market expectations.
The company also announced plans to close all 379 of its Teavana stores by the middle of next year because they have been "persistently underperforming". About 3,300 jobs will be affected. The company also announced plans to close all 379 of its Teavana stores by the middle of next year because they had been "persistently underperforming".
Starbucks had bought the tea brand for $620m in 2012 but says it will continue to carry the products in its main Starbucks stores. Starbucks bought the tea brand for $620m in 2012, and plans to continue carrying the products in its main Starbucks stores.
Starbucks shares fell 5.5% to $56.24 in after-hours trading.Starbucks shares fell 5.5% to $56.24 in after-hours trading.
Chinese dreamsChinese dreams
The latest quarterly results are the first under new chief executive Kevin Johnson, who took over from co-founder Howard Schulz in December. The latest results are the first under new chief executive Kevin Johnson, who took over from co-founder Howard Schulz in December.
The world's largest coffee chain is being affected by a reduced footfall in America's malls and high streets. Mr Johnson described the China buyout as part of the firm's "long game" to deal with cooling growth in the US.
US retailers and restaurants have been struggling as more consumers turn to shopping online or buying from meal kit sellers and convenience stores. The world's largest coffee chain is being affected by a reduced footfall in America's malls and high streets, as more consumers turn to shopping online or buying from meal kit sellers and convenience stores.
Starbucks' investment in China also comes amid slowing same-store sales in the US, which rose by 5% last quarter. Same-store sales in the US rose by 5% last quarter. In China, there was 7% growth.
Same-store sales from China, in comparison, rose 7% last quarter. License deal
Starbucks has 2,800 stores in 130 cities in China, and aims to grow that number to more than 5,000 stores by 2021. Starbucks already has a presence in 130 Chinese cities and hopes to expand its 2,800 stores to more than 5,000 outlets by 2021.
There are nearly 600 stores in Shanghai alone, the largest number globally of any city. There are nearly 600 stores in Shanghai alone, the largest number of any city globally.
Meanwhile, Starbucks said it was offloading its 50% stake in all 410 outlets in Taiwan, meaning they will be fully owned by its joint venture partners. who pay the US firm license fees.
The firm made a similar move with its Hong Kong and Macau operations in 2011.