Starbucks buys Starbucks

Sazaby is selling its majority stake in Starbucks, a business that transformed Sazaby’s turnover,  while it somehow managed to retain its identity as a quirky fashion to interiors retailer. By selling off Starbucks Japan, whose turnover exceeds that of Sazaby by ¥30 billion, the Sendagaya-based firm can return to its eclectic roots, but still with plenty of potential growth from chains such as Flying Tiger.

Starbucks has agreed to buy the 60.5% of Starbucks Japan it doesn’t own. Starbucks Japan has operated as a joint venture between Starbucks and Sazaby League since 1995 but over the summer, Sazaby asked the US firm to buy its stake in what is now a 1,000 store chain with 25,000 workers, and sales of ¥125.6 billion last year.

The two firms agreed to value Sazaby’s stake at ¥55 billion or ¥965 per share. This will give Starbucks 79% of the Japanese arm and it will then offer cash for the remaining 21% owned by public shareholders and option holders, at a price of ¥1,465. By June 2015 Starbucks is expected to have full control.

Sazaby League wants to focus on its lifestyle consumer goods business, but the timing also looks good for a sale given that Starbucks is already well-represented across Japan, coffee prices are rising and convenience stores are piling in with cheap takeaway coffee too. Sazaby is expected to use some of the funds to pay off debt incurred from its MBO in 2011, as well as sign new brands for the Japanese market. Recent signings include Rachel Ashwell, Raquel Allegra and Malie, the Hawaiian cosmetics brand, but it is also having great success with its Ron Herman franchise.

Sazaby is also busy expanding the Flying Tiger chain of knick knack stores, a business that looks set to become a major source of growth for Sazaby, if not quite the size of Starbucks. Flying Tiger opened its first store in Japan in July 2012 and signed a joint venture deal with Sazaby a year later. It began ramping up expansion from this summer, opening five stores in two months and now has 10 stores in Japan. Last month it opened within Printemps Ginza, Machida Tokyu Twins and Marui City, Yokohama.