Shinsegae Accelerates Additional Acquisition of Starbucks Korea Shares

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Yuri] Shinsegae Group is accelerating its additional acquisition of shares in Starbucks Korea.

According to the distribution industry on the 26th, Shinsegae Group is about to complete the process of acquiring an additional 20% stake in Starbucks Korea held by Starbucks headquarters in the U.S. (Starbucks International) to become the sole largest shareholder soon. The industry expects that a stock purchase agreement between Shinsegae and Starbucks International will be signed as early as this week.

Currently, the shares of Starbucks Korea are equally divided between Starbucks International and E-Mart, each holding 50%. The remaining 30% stake held by Starbucks International is likely to be acquired by the Government of Singapore Investment Corporation (GIC). If the acquisition is confirmed, E-Mart will hold 70% and GIC will hold 30% of Starbucks Korea shares.

The corporate value of Starbucks Korea is estimated to be in the high 2 trillion KRW range. Shinsegae Group has been negotiating since last year to acquire the shares held by Starbucks International. However, a Shinsegae official said, "We are in talks to acquire additional Starbucks shares," but added, "No specific schedule has been decided yet."

If Shinsegae Group becomes the largest shareholder of Starbucks Korea, the decision-making process is expected to be shortened and authority increased compared to before, enabling faster collaboration and new business initiatives. The group's dividend size is also expected to increase. Starbucks Coffee Korea surpassed 1 trillion KRW in sales in 2016, 20 years after its first entry into the domestic market in 1997. Since then, it continued its growth with sales of 1.2635 trillion KRW in 2017, 1.5224 trillion KRW in 2018, and 1.8696 trillion KRW in 2019. Even last year, heavily affected by COVID-19, it recorded sales of 1.9284 trillion KRW, a 3.1% increase from the previous year.

Meanwhile, in the investment banking (IB) industry, there is speculation that Shinsegae Group will pursue an initial public offering (IPO) of Starbucks Korea after completing the share acquisition. Regarding this, a Shinsegae official said, "We are not considering listing at this time."