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Starbucks Rises as India Deal Nears

SEATTLE ( TheStreet) -- Starbucks (SBUX - Get Report) shares continued to climb Tuesday following reports that a long-awaited deal to open Starbucks stores in India was imminent.

Starbucks announced in January that it entered into a non-binding memorandum of understanding with India's Tata Coffee to collaborate on sourcing and roasting green coffee beans in Tata's Coorg, India-based facility, as well as jointly explore "the development of Starbucks retail stores in associated retail outlets and hotels."

Reports this week suggest a joint venture of retail stores could be announced within the next several weeks, sparking investor excitement at Starbucks' potential growth in India's emerging economy.

Starbucks spokeswoman Lisa Passe said the company hopes to make the announcement soon after moving ahead with talks and planning with Tata.

"This [memorandum of understanding] is the first step in our entry to India," Starbucks CEO Howard Schultz said in January, commenting on the initial announcement of a Starbucks-Tata partnership. "We are focused on exploring local sourcing and roasting opportunities with the thousands of coffee farmers within the Tata ecosystem. We believe India can be an important source for coffee in the domestic market, as well as across the many regions globally where Starbucks has operations."

India is just one piece of Starbucks' plans for global expansion as U.S. market demand slows down. A major Latin American franchisor of Starbucks stores said Monday it plans to open around 300 stores in Mexico and Argentina over the next five years. Alsea, the franchisor who made the statement, also operates Domino's Pizza (DPZ - Get Report) and Burger King stores in Latin American markets.

Starbucks has laid plans to expand rapidly in China, a booming market with growing consumer discretionary dollars, by tripling its store locations in the country. Other Asian nations as well such as smaller markets like Guatemala can also expect more Starbucks stores . The company said in July it intends to generate half of its revenue from markets outside the U.S. in the near future.

Starbucks shares were 1% higher at $41.33 at midday on Tuesday.

-- Written by Miriam Marcus Reimer in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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