If Starbucks headquarters in U.S. exercises a call option based on alleged damage to the brand’s image due to a recent controversy, E-Mart could lose more than 600 billion won
Logo of Starbucks.
E-Mart, the largest shareholder of Starbucks Korea, is facing growing financial risks amid a recent controversy surrounding the coffee chain. If Starbucks headquarters in the United States exercises a call option based on alleged damage to the brand’s image, the retailer could lose more than 600 billion won, equivalent to $398.7 million, in asset value. At the same time, E-Mart is facing mounting pressure from financial support for its struggling subsidiary Shinsegae Engineering & Construction.
According to the Korea Exchange, E-Mart shares were trading at 90,000 won as of 10 a.m. on May 21. The stock has fallen 24.2 percent from last week’s peak. The sharp decline follows a brand controversy involving Starbucks Korea, which recently held a “Tank Day” promotion that sparked accusations of disparaging the May 18 Gwangju Democratization Movement. As backlash intensified, shares of E-Mart and its affiliates declined across the board.
The ownership of Starbucks Korea, officially known as SCK Company, is split between E-Mart with 67.5 percent and Apfin Investment Private Limited, a subsidiary of the Government of Singapore Investment Corporation, with 32.5 percent. During the stake acquisition process in 2021, E-Mart reportedly signed an agreement with the U.S. headquarters that included a call option clause. The clause dictates that if the South Korean partner causes severe damage to the brand value through actions attributable to itself, the U.S. headquarters can forcibly repurchase the entire stake at a 35 percent discount relative to its fair market value.
At the time, Starbucks Korea was valued at around 2.7 trillion won, placing the value of E-Mart’s stake at approximately 1.82 trillion won. Applying the discount under the call option would wipe out roughly 630 billion won in asset value.
As the controversy escalates into a nationwide boycott movement against Starbucks, speculation has emerged that the call option could be exercised. E-Mart stated that it does not expect the issue to affect the agreement. However, analysts note that the criteria for determining brand damage have not been publicly disclosed and that Starbucks headquarters issued its own apology statement, suggesting the company views the matter seriously.
Choi Mun-hee
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