Starbucks $SBUX’ China business is getting a lot of attention, with private equity firms lining up to buy a stake that could value the unit as high as $10 billion, CNBC reported Wednesday, citing people familiar with the talks.
According to the report, nearly 30 domestic and international private equity firms have submitted non-binding offers so far. Some of the big names apparently in the mix include Asia-based Centurium Capital and Hillhouse Capital, as well as U.S. firms Carlyle Group and KKR.
Starbucks isn’t looking to cash out completely, though. The company reportedly wants to keep a “meaningful stake” in its China operations – potentially around 30% – while selling the rest to a group of buyers, each with less than a 30% share.
“Any deal must make sense for Starbucks business and partners,” the company said in a statement to CNBC, adding that it’s looking for a strategic partner who shares its vision of offering a "premium coffeehouse experience" in China.
Bids so far reportedly value the business between $5 billion and $10 billion, with expectations that final offers will land closer to the higher end. Shortlisting could happen within the next two months, but the entire deal might not close before the end of the year, CNBC noted. Goldman Sachs $GS is advising Starbucks on the sale.
The potential deal comes as Starbucks faces mounting challenges in China. The company’s market share has dropped from 34% in 2019 to 14% in 2024, according to Euromonitor, as local brands like Luckin Coffee and bubble tea chains continue to win over customers. Starbucks’ same-store sales in China were flat last quarter after four straight quarters of decline.
To try and win back customers, Starbucks recently cut prices on more than 20 drinks and launched sugar-free options to appeal to health-conscious consumers. CEO Brian Niccol told the Financial Times last month that investors see the potential for Starbucks to grow from its current 7,800 stores to as many as 20,000 locations in China.
Still, analysts warn that rising rental costs, growing competition, and shifting consumer preferences could be major hurdles going forward. For Starbucks, bringing in local partners might be the best way to navigate what has become a tough – but still promising – market.
Quartz reached out to Starbucks for comment but did not receive a reply by the time of publication.