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Wednesday, April 29, 1998 - Page updated at 12:00 AM

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Starbucks To Buy U.K. Company -- Seattle Coffee Deal Opens Door Into Europe

Seattle Times Business Reporter

In 1983, the romance of Italian espresso inspired Howard Schultz to create a European-style coffeehouse for Americans, and today, Starbucks announced big plans to return to the Old Country.

The retail-coffee giant plans to enter the European market with the purchase of Seattle Coffee in the United Kingdom. That company, run by two Seattle natives, operates 56 Starbucks-style retail stores across the U.K.

Starbucks is acquiring the company in exchange for about 1.8 million shares of common Starbucks stock, or about $83 million. The deal helped push Starbucks' stock up $1.313 to $46.375 late today.

Starbucks will use London and the U.K. as the springboard for opening 500 retail stores in Europe by the end of 2003. The global expansion plan includes opening 500 more retail coffee stores in the Pacific Rim and Asia in the same time frame.

While Starbucks' expansion into Asia has been a success, the company's decision to return to the cradle of coffee culture likely will present one of its biggest challenges.

That's why Schultz said Starbucks will move cautiously into Europe. The company first will build on the success of Seattle Coffee in the U.K. before crossing the English Channel.

"We're a ways from taking the step from the U.K. to Europe," said Schultz, chairman and chief executive officer of Starbucks. "We're very cognizant of the quality of coffee and the heritage of coffee in Italy and France, which we are extremely respectful of."

Still, Schultz said, Europe is a "major strategic opportunity to achieve our goal of creating and building an enduring global brand."

Seattle Coffee was founded by natives Scott and Ally Svenson in 1995. They will continue to run the business in the U.K., with the support of Starbucks International.

Seattle Coffee is the leading retail coffee company in the U.K. and has plans to open 30 more stores by the end of the year.

Starbucks is the biggest retailer and roaster of specialty coffee in North America, with 1,636 retail stores in the U.S. and Pacific Rim.

Stanley Holmes' phone message number is 206-464-2732. His e-mail address is: sholmes@seattletimes.com

Copyright (c) 1998 Seattle Times Company, All Rights Reserved.

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