TLDR
- Starbucks is exploring options for its Japan business, including a potential stake sale
- The deal could value the Japan unit at ¥400–500 billion ($2.5–3 billion)
- Interest may come from industry players and private equity firms
- The move follows Starbucks’ April sale of a controlling stake in its China business for $4 billion
- SBUX stock is up 2.73% on the news and 15.7% year-to-date
Starbucks (SBUX) is weighing strategic options for its Japan business, including selling a stake in the unit, according to a Bloomberg report published Tuesday citing people familiar with the matter.
The potential transaction could value the Japan business at between ¥400 billion and ¥500 billion, or roughly $2.5 billion to $3 billion. Both industry players and private equity firms are said to be potential suitors.
SBUX stock moved up 2.73% on the news.
Starbucks did not respond to requests for comment. No final decision has been announced.
The company took full ownership of Starbucks Coffee Japan in 2014, buying out the remaining stake from its local partner Sazaby League. The two had operated the Japan business as a joint venture since 1995.
This isn’t the first time Starbucks has looked to restructure an international operation. In April, the company closed a deal with Boyu Capital to sell a controlling stake in its China business, valuing that unit at $4 billion.
The China deal was driven in part by years of slowing growth, pandemic disruptions, and stiff competition from local rivals like Luckin Coffee.
Japan Could Follow the China Playbook
A similar logic may apply to Japan. Bringing in a local strategic partner could help reduce operational risk while still keeping Starbucks present in the market.
A partial sale could also free up capital at a time when CEO Brian Niccol is pushing through a broader turnaround strategy. Costs have been rising faster than expected under that plan, and the timeline for margin recovery remains a key investor concern.
Starbucks did post its strongest quarterly sales growth in two and a half years in April, a sign that Niccol’s strategy is gaining some traction on the revenue side.
What Analysts Are Saying
Wall Street remains cautiously optimistic on the stock. According to TipRanks, SBUX carries a Moderate Buy consensus rating based on 17 Buy ratings, 10 Holds, and one Sell over the past three months.
The average analyst price target sits at $110.88, which implies around 14% upside from current levels.
SBUX is up 15.7% year-to-date heading into this latest development.
The Japan business has been fully owned by Starbucks since 2014, when it completed the buyout of Sazaby League’s stake. Before that, the two had run the Japan operation together for nearly two decades.
Reuters was unable to independently verify the Bloomberg report, and Starbucks has not confirmed whether a sale process is formally underway.
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