Starbucks (SBUX) is literally doubling down on its East China business.
The coffee chain said on Thursday it would buy out its joint venture partners in that business, shelling out $1.3 billion for the 50% it doesn’t already own in Starbucks’ biggest deal ever.
The deal gives Starbucks sole ownership of 1,300 restaurants in East China, a region that includes major markets such as Shanghai, as well as Jiangsu and Zhejiang provinces, and is aimed at bolstering it position in what is its fastest-growing market outside of the U.S. Starbucks has another 1,500 stores in China, and the company reaffirmed its long term goal of having 5,000 stores in mainland China by 2021.
“Unifying the Starbucks business under a full company-operated structure in China reinforces our commitment to the market,” Starbucks CEO Kevin Johnson said in a statement.
Former CEO and current executive chairman Howard Schultz said in 2015 that China has the potential to be the company’s top market. And the company could use the boost: growth in customer traffic has slowed of late, hurt in part by slow service.
Starbucks is buying the East China stores from partners Uni-President Enterprises Corp and President Chain Store Corp, which will in turn buy Starbucks’ 50% stake in their Taiwanese joint venture for about $175 million. The Taiwan JV operates about 410 Starbucks stores, which will now be entirely licensed.
Starbucks is set to report third-quarter earnings on Thursday afternoon.