Starbucks agreed to sell a 60 per cent stake in its Chinese operations to a private-equity firm, ending months of speculation about whether the US coffee chain would divest itself of its mainland operations amid dimmer business prospects and the ascent of local rivals.
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The Seattle-based company said on Monday that it signed an agreement with Boyu Capital to set up a joint venture for its mainland business. Starbucks would hold a 40 per cent interest in the unit and remain the owner and licenser of the namesake global brand, it said.
Starbucks valued its Chinese business at more than US$13 billion and did not disclose the value of the stake it sold to Boyu Capital. The transaction was for US$4 billion, according to Bloomberg News.
Local rivals including Luckin Coffee and Cotti Coffee have overtaken the American company in mainland market share in recent years, as Chinese consumers tightened their purse strings amid a deteriorating labour market. The local coffee brands, as well as many vendors of tea-based drinks, sell beverages for a fraction of the price of a Starbucks coffee.
Boyu Capital won the deal by outbidding more than 20 competitors including Carlyle, Hillhouse Investment and Primavera Capital. Most of the bidders valued Starbucks’ China business at around 10 times its expected US$400 million to US$500 million in earnings before interest, taxes, depreciation and amortisation for 2025, Reuters reported earlier.
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Founded in 2011, Boyu Capital is incorporated in the Cayman Islands. The firm has businesses including private equity, real assets and infrastructure, venture capital and a renewable-energy platform, according to its website.