What Starbucks, Pepsi and Walmart Did to Control Their Destinies

NEW YORK (TheStreet) -- Starbucks (SBUX) isn't the only consumer company to buy back a partner's stake in order to control its own destiny in the market.

The global coffee giant announced on Sept. 22 that it would acquire the remaining 61% of its Japanese operations held by long-time partner Sazaby League for $913.5 million. On a conference call discussing the deal, Chief Operating Officer Troy Alstead stated, "We will be positioned to accelerate growth in a market that offers tremendous opportunity for us."

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Starbucks had 1,051 stores in Japan as of June 29. The deal is expected to be accretive to earnings in fiscal year 2015, according to the company.

Starbucks, which my firm Belus Capital Advisors rates a buy, has been building its business in the U.S. through efforts like expansion of its menu with new drinks and food. With this deal the company is in a better position to replicate that focus in Japan, in addition to opening free-standing Teavana stores to tap into the strong appetite for brewed and packaged tea.

The potential for Starbucks' tea business in Japan is huge. Tea is the most commonly drunk beverage in Japan, according to Japan-Guide.com, and an important part of Japanese food culture. 

Starbucks has joined a long list of consumer product behemoths, from Polo Ralph Lauren (RL) to Walmart (WMT) to Activision Blizzard (ATVI) , in exiting partnerships that allowed for quick expansion into new geographic markets or product categories.

Although full ownership of operations helps to tie a brand's messaging and logistics together globally, a consideration for investors is that there are near-term expenses that otherwise wouldn't have existed.

Here is a look at seven other similar transactions by big-name brands.

Guess (GES)

Between 2005 and 2013, the trendy apparel retailer acquired several of its European apparel licensees. As a result, it now directly manages its adult and children's apparel businesses in Europe.

In 2005, for example, Guess completed the acquisition of its remaining 90% stake of Maco Apparel, S.p.A., its Italian licensee of jeanswear for men and women in Europe. Following that up in 2006, the company acquired 75% of Focus Europe, S.r.l., as well as the leases and assets of four retail stores in Italy. During fiscal 2013, the company bought the remaining 25% interest. Focus had served as the licensee, manufacturer, distributor and retailer of Guess' Marciano branded apparel for men and women in Europe for the 10 years before the acquisition.

Guess is likely not done as a purchaser of its licensed operations -- the company currently has 15 domestic and international licenses that cover eyewear, watches, handbags and other accessories.

Polo Ralph Lauren (RL)

Arguably the most aggressive acquirer of partnership stakes through the year.

In April 2013, Polo entered into an agreement with Warnaco Group to acquire assets related to its North American Chaps-branded men's sportswear business for a total cost of $18 million. Then, in July 2013, the company paid $15 million to Oroton Group/PRL Australia to gain control of its apparel and accessories operations in Australia and New Zealand.

On Jan. 1, 2011, the company sent about $45 million in sum to licensee partner Doosan for its Ralph Lauren South Korea business.  And on Dec. 31, 2009, Polo shelled out $37 million in total consideration to licensee partner Dickson to acquire its Polo-branded apparel in the Asia-Pacific region.

Costco (COST)

A supersized deal was inked by the company in June 2012 to acquire the 50% stake it didn't own for its Mexico operations. Costco spent the equivalent of $760.4 million to buy out partner Controladora Comercial Mexicana.

Walmart (WMT)

Last year, the world's largest retailer tossed in the towel with its Indian partner Bharti. Under the separation agreement, Walmart acquired the 20 Best Price Modern Wholesale cash-and-carry stores that had been run by its joint venture partner. No transaction cost was disclosed.

Walmart had formed the partnership with Bharti in 2007, with the first store opened together being a Best Price Modern Wholesale format in 2009.
 

Activision Blizzard (ATVI)

The Call of Duty videogame publisher completed a deal in October 2013 to buy about 429 million of its shares from Vivendi  (VIV) for about $5.83 billion in cash. Further, CEO Bobby Kotick and then Co-Chairman Brian Kelly led a group in buying roughly 172 million shares of Activision Blizzard from Vivendi for $2.34 billion.

Coca-Cola (KO)

As evidenced by the aforementioned transactions, partnership stakes have a tendency to be bought at some point in the future.

This explains why investors sent shares of Monster Beverage (MNST) soaring about 31% on Aug. 15 following news of Coca-Cola taking a 16.7% ownership interest.

PepsiCo (PEP)

The next consumer company to potentially join the list of companies buying out a partner's stake is PepsiCo, which could gobble up hummus maker Sabra. In December 2007, PepsiCo and Strauss Group announced a 50/50 joint venture for Sabra.

Since the deal was inked, the market for hummus has exploded, as suggested by comments from Sabra's CEO Ronen Zohar to CNBC in 2013. According to the company at the time, it expected in six years its annual sales to grow to $800 million, potentially reaching "$1 billion in a few years."

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