Shares of Taiwan firms fall on sale of China Starbucks business
Shares of Taiwan’s Uni-President Enterprises Corp and President Chain Store tumbled in Taiwan for two straight days after they said they were selling their combined 50-per cent stake in the China Starbucks venture, which would grant the US coffee chain giant full ownership of the lucrative mainland business.
Uni-President dropped more than 1 per cent to NT$57.80 (HK$15) on the Taiwan bourse on Monday, while President Chain Store fell 3.8 per cent to NT$256 (HK$66.20).
Starbucks said it would pay US$1.33 billion for the remaining stake in Shanghai Starbucks Coffee Corp, which operates about 1,300 stores in the fast-growing eastern region of Shanghai, Jiangsu and Zhejiang provinces.
The deal is Starbucks’ single biggest acquisition, which underscored the importance of the Chinese market to the Seattle-based coffee chain.
By exiting Shanghai Starbucks Coffee, Uni-President could loose up to NT$4.13 billion in earnings, or five times of its Taiwan Starbucks’ earnings, according to Taiwan’s Central News Agency , citing the company’s 2016 annual results.
In return, the two Taiwanese companies said they would acquire Starbucks’ 50-per cent interest in President Starbucks Coffee Taiwan, and assume 100 per cent ownership of Starbucks operations in Taiwan. There are 410 stores on the island.
Chih-Hsien Lo, Uni-President chairman was quoted by CNA as saying that they would try to fill the profit gap from other business channels, without giving details.
The Uni-President Group has been operating the Starbucks franchise in both Taiwan, and in Shanghai, and Jiangsu and Zhejiang provinces since 1997, turning the coffee chain into one of the most popular coffee brands in those regions, Lo was quoted as saying.