Starbucks has asked a select group of shortlisted bidders to submit non-binding offers for a stake in its China business within the next two weeks, according to people familiar with the matter.
The U.S. coffee giant invited private equity firms including Carlyle, EQT (ST:EQTAB), Hillhouse Investment, and Primavera Capital to attend management presentations that outlined financial and operational details of its China operations. Other potential bidders named include Bain Capital, KKR & Co (NYSE:KKR), and tech giant Tencent, sources said.
A new strategic partner could provide momentum for Starbucks’ China business, where its market share has dropped sharply over the past five years as local rivals such as Luckin Coffee capture cost-conscious consumers in a slowing economy.
The sale process began in May, with Starbucks initially inviting interested parties to submit responses by late June. By July, the company had signed non-disclosure agreements with up to 10 selected bidders, granting them access to financial data. While the size and structure of the stake sale have not been finalized, the business is expected to be valued at up to $10 billion, according to CNBC.
Starbucks CEO Brian Niccol has emphasized that the company intends to retain a significant stake in its China operations. “We remain committed to our China business and will only enter a transaction if it makes sense for Starbucks,” Niccol said during the latest earnings call.
The company continues to face challenges in China, where its market share fell to 14% in 2023 from 34% in 2019, according to Euromonitor International. Despite this, Starbucks has taken steps such as lowering prices on select non-coffee drinks and introducing more localized products. Comparable-store sales in China rose 2% in the quarter ending June 29, marking a modest improvement.
Starbucks currently operates 7,828 stores in China, making it one of the company’s most important international markets.
