Starbucks’ potential sale of a stake in its China business has attracted multiple bids that value the local operations as high as $10 billion, CNBC reported.
Why it matters: China is Starbucks’ largest market outside the US and accounts for over 8% of its global revenue. A multi-billion dollar deal would not only unlock local capital for expansion but also mirror a broader playbook by Western chains seeking to accelerate growth through local partnerships. It comes as Starbucks faces mounting competition from aggressively priced domestic brands like Luckin, prompting the coffee giant to adapt with price cuts, localized marketing, and ambitious plans to nearly triple its China store count. How Starbucks structures this deal could reshape its position in the world’s fastest-growing coffee market.
Details: Nearly 30 domestic and international private equity firms have submitted non-binding bids, according to sources cited by CNBC. The offers reportedly value Starbucks’ China business between $5 billion and $10 billion, with the final transaction likely to be priced toward the upper end of that range.
- A person familiar with the matter noted Starbucks’ global market cap stands at around $108 billion, and its China business could reasonably be valued near $9 billion given its revenue contribution.
- Starbucks is currently assessing bidders’ offers, deal structures, and post-sale value creation plans before finalizing a shortlist – expected within two months. However, sources indicated the transaction is unlikely to close before year-end.
- In a statement to CNBC, Starbucks said it intends to retain a “meaningful stake in the business,” emphasizing that “Any deal must make sense for Starbucks business and partners.”
- Bidders reportedly include Centurium Capital (major shareholder of rival Luckin Coffee), Hillhouse Capital, and US buyout giants Carlyle and KKR. Goldman Sachs is advising on the process. Still, insiders cautioned that Starbucks could pause the sale if offers fall short of expectations.
Context: Industry experts liken the move to McDonald’s 2017 sale of a majority stake in its China business to Citic Capital and Carlyle, which valued the unit at $2.1 billion. In 2023, McDonald’s raised its ownership back to 48% by buying out Carlyle’s stake at a $6 billion valuation – capturing the benefits of rapid local expansion.
- Similarly, Starbucks is expected to keep equity to share in future growth and maintain influence over new partners. The company has ruled out a full exit, saying last month it does not plan to completely sell off its China operations.
- Starbucks formally kicked off the sale process late last year and has since received robust interest. CEO Laxman Narasimhan told investors the brand value and long-term coffee growth story in China remain strong, supporting ambitions to grow its store count from 8,000 to 20,000. As of March, Starbucks operated 7,758 outlets in China.
However, the chain faces intensifying competition and rising costs. As local players like Luckin and other budget coffee brands gain traction, Starbucks’ market share slid from 34% in 2019 to 14% in 2024. In June, Starbucks cut prices in China for the first time, trimming about RMB 5 off 20 iced beverages and introducing sugar-free options. Narasimhan said the company is also investing in local cultural marketing and tiered pricing strategies to revive performance.
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