"We've been in China for 18 years and we're in it for the long game", Mr. Johnson said, explaining that having control over its entire business in China will enable Starbucks to expand more quickly and better leverage its scale.
The company on Thursday said it is spending $1.3 billion to buy the 50% stake of the business in East China that it doesn't already own from a joint venture partner there, or 1,300 stores.
"Starbucks will assume 100 percent ownership of approximately 1,300 Starbucks stores in Shanghai, and Jiangsu and Zhejiang provinces, building on the company's ongoing investments in China, its fastest-growing market outside of the United States in terms of store count", the release said. It wants to grow the market to more than 5,000 locations by 2021.
In a separate deal, Starbucks will sell its 50 percent stake in its Taiwanese JV to UPEC and PCSC for about $175 million.
"We've had a strong friendship with Starbucks for almost 20 years, starting with the opening of the first store in Taiwan and then further extending our partnership with the opening of the first store in East China", said Alex Lo, chairman, Uni-President Enterprises Corporation.
Starbucks shares whipsawed after the bell Thursday after the company posted weaker-than-expected third-quarter earnings and said that it plans to close all of its Teavana retail stores.More news: Coca-Cola Company (The) (NYSE:KO) Experiences Light Trading Volume
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Johnson called the two companies "highly-recognized local operators" and called the deal "a critical next step as we advance our multifaceted China growth strategy for long-term profitable growth in Asia".
Shanghai has nearly 600 Starbucks outlets, the largest number in any city.
East China is an important market for Starbucks in China.
Starbucks plans to open its ultra-premium Starbucks Reserve Roastery in the country in December of this year.
Starbucks said "despite efforts to reverse the trend through creative merchandising and new store designs, the underperformance was likely to continue" and they chose to close all the stores.