Starbucks to quit South Korean company valued at over $ 2 billion

July 27 (Reuters) – Starbucks Corp (SBUX.O) exits its joint venture in South Korea, the US coffee giant’s fifth largest market, selling part of its stake to local partner E-Mart Inc (139480.KS ) and the rest to the Singapore sovereign wealth fund, GIC.

E-Mart, one of South Korea’s largest retailers that currently owns half of the joint venture, will buy an additional 17.5% stake for $ 411 million, it said in a filing Tuesday. It will operate Starbucks stores. GIC will hold the remaining 32.5%.

This suggests a valuation of $ 2.35 billion for the entire company, and that GIC will pay more than $ 700 million for its stake, according to Reuters calculations.

GIC declined to comment on the value of the transaction.

Starbucks said the deal is expected to close within the next 90 days.

“South Korea continues to be an important market for Starbucks,” said Michael Conway, Starbucks group president for international development and distribution channels on Tuesday.

“Part of our success in South Korea – and in many of our international markets – is due to our expertise and judgment in knowing when to count on local partners to continue growing the business. “

With more than 1,500 stores in 78 cities, Starbucks Coffee Korea’s operating profit jumped nearly three-quarters to 45.4 billion won ($ 39.5 million) in January-March. Last year, amid pandemic restrictions, revenues fell 6% from 2019 figures.

Starbucks Korea, however, declined to comment on why the American coffee giant agreed to divest its stake in the East Asian country.

A spokesperson for Starbucks based in Hong Kong could not be reached immediately.

“Starbucks and E-Mart have had many conversations about how we can continue to grow the Starbucks brand in the marketplace, which has led to this decision,” said TJ Hyung, executive vice president of E-Mart , which operates a nationwide network of more than 160 hypermarkets, discount stores and other specialty stores.

E-Mart and its parent company Shinsegae Group have taken advantage of a disruption caused by a pandemic in the Asian e-commerce industry to buy out some companies.

A spokesperson for Shinsegae said Starbucks Coffee Korea will continue to have a licensing agreement with Starbucks, as it did when it was a joint venture between Starbucks and Shinsegae Group.

E-Mart announced last month that it would buy most of the South Korean business from EBay (EBAY.O) for $ 3 billion, while another Shinsegae subsidiary, SSG.COM Corp, bought a online mall for 265 billion won in April. Read more

($ 1 = 1,150,4,500 won)

Reporting by Shubham Kalia in Bengaluru and Joyce Lee in Seoul; Additional reporting by Anshuman Daga in Singapore; Editing by Ramakrishnan M., Sayantani Ghosh and Sherry Jacob-Phillips

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