Starbucks to exit South Korea business to expand globally

Starbucks Corp has decided to sell its $2 billion worth business in South Korea and exit the country by selling its stakes to local partner E-Mart Inc and Singapore sovereign wealth fund GIC.

The US-based coffee chain is looking forward to investing in international markets which have higher growth potential.

E-Mart, which already has 50% stakes in the company, will buy an additional 17.5% stakes in Starbucks Coffee Korea for $411 million while GIC will buy the remaining 32.5%.

Starbucks has more than 1500 stores across 78 cities in South Korea making the country fifth-largest market for the coffee chain. The analysts, though, say that Starbucks does not have growth opportunity in the country.

The company has been expanding globally in the recent years including countries such as China where the sales nearly doubled in the latest second-quarter.

Starbucks said that the operating profit surged nearly three-quarters in January-March quarter to 45.4 billion won ($39.5 million) and therefore the country remains an important market for the company.

"Part of our success in South Korea - and in many of our international markets - is due to our expertise and judgment in knowing when to rely on local partners to continue to build the business," Michael Conway, Starbucks' group president for international and channel development, said in a statement.

The deal is expected to be completed over the next 90 days, the company said.

(With inputs from Reuters)

Picture Credits: Reuters