Boyu Capital, a private equity firm from China, is leading the race to acquire a majority stake in Starbucks’ China operations, a deal that could potentially value the unit at over US$4 billion.
Boyu Capital remains in the bid after the final contender, Carlyle Group, chose to withdraw. Key partners from both companies travelled to the U.S. to engage in final discussions with the Seattle-based coffee chain.
After the sale is finalized, it’s expected that Starbucks will retain a substantial minority stake in its China operations. The company expressed that it has received strong interest from numerous high-quality partners, all of whom have faith in the long-term growth potential for Starbucks in China.
The company is currently assessing bids from five contenders, though it declined to comment further. Starbucks China was valued at roughly $4 billion by the bidders who submitted binding offers, which is approximately ten times its core earnings.
Starbucks CEO, Brian Niccol, previously indicated that the anticipated valuation of the China business would exceed $10 billion, factoring in the upfront investment from a potential partner, Starbucks’ retained stake in the China business, and future royalty payments.
There is also the possibility of other parties, such as internet companies, joining the discussions as limited partners to assist in funding the deal.
Starbucks’ decision to divest in China comes amidst fierce competition from local coffee chains that have gained market share by offering less expensive products during an economic slowdown that has altered consumer behavior.
In response to these challenges, Starbucks has implemented strategies such as lowering prices for selected non-coffee beverages in China and increasing the introduction of new, localized products.
Sales in comparable stores in China increased by 2% in the quarter that ended on June 29, following a quarter with no growth. Starbucks’ earnings for the fourth quarter and the 2025 fiscal year will be reported on October 29.
Who is the frontrunner to buy a controlling stake in Starbucks’ China business?
Boyu Capital, a private equity firm from China, is leading the race to acquire a controlling stake in Starbucks’ China operations.
What is the potential value of Starbucks’ China unit?
The deal to acquire the majority stake in Starbucks’ China operations could potentially value the unit at over US$4 billion.
What strategies has Starbucks implemented in response to increasing competition in China?
Starbucks has lowered prices for selected non-coffee beverages in China and increased the introduction of new, localized products to counter the competition.
