Starbucks goes public in Japan; IPO raises $149 million

Starbucks went public in Japan this morning as investors snapped up shares of its Japanese unit, bidding up the price by as much as 30 percent during a much-anticipated initial public offering (IPO) of stock.

"This is an opportunity to demonstrate the power of the brand beyond the United States," Chairman Howard Schultz said in a telephone interview from Osaka, Japan, this morning.

Schultz was on hand at the Osaka Securities Exchange, home to Nasdaq Japan, for the listing of Starbucks Coffee Japan, a joint venture between the Seattle-based specialty-coffee retailer and Sazaby, a Japanese retailer and restaurant operator.

Schultz said the 17.9 billion yen, or $149 million, that Starbucks Japan raised from the IPO will help the company expand throughout the country and will provide liquidity for a stock-option program for Starbucks employees in Japan.

The company has 300 stores in Japan and has said it plans to be operating 500 by March 2004.

Starbucks Japan shares, which were priced in the IPO at 64,000 yen, or about $530, climbed as much as 30 percent to 83,000 yen in morning trading today in Osaka. At midday, they were trading at 78,000 yen.

That put Starbucks Japan's market capitalization near $1 billion. Starbucks Japan has 1.42 million shares outstanding, 20 percent of which were offered to the public.

Starbucks sold shares as Japan's benchmark stock-market index hovers near 18-year lows on concern the country's economy will weaken further if terrorist attacks on the U.S. lead to a global recession. Yet the specialty coffee business is still new in Japan, giving the company room to grow.

"I think the Japanese investment community, given what Starbucks has been able to accomplish in the United States, recognizes that the size of this market that Starbucks occupies and leads in is extremely large," Schultz said. "These are the early days."

Starbucks is now the second Seattle-based coffee retailer to go public in Japan. Tully's listed on Nasdaq Japan in July, and has nearly quadrupled in value from its IPO price.

Information from Seattle Times news services is included in this report.

Jake Batsell can be reached at 206-464-2718.