Starbucks Seeks Buyer for Controlling Stake in China Business Amid Market Challenges

Global investment giants Carlyle Group and EQT, along with regional firms HongShan Capital Group (HSG) and Boyu Capital, are preparing final bids for a controlling stake in Starbucks’ China operations, according to sources familiar with the matter. Starbucks has requested binding offers by early October, with a potential agreement expected by the end of next month.

The coffee chain had previously invited about 10 potential buyers to submit initial bids valuing its China business at up to $5 billion. While Starbucks has now decided to sell control of its China unit, the exact size of the stake remains undisclosed. Chinese private equity firm Primavera Capital is also expected to participate, likely teaming up with one of the four main bidders.

Starbucks intends to keep ownership of its coffee bean roasting facility in China to safeguard product quality. Although the final deal structure is still under negotiation, the company has stated it plans to maintain a significant minority stake. Goldman Sachs is advising on the sale, but both the bank and the bidders have declined to comment.

The sale comes as Starbucks battles declining market share in China, which accounts for over 20% of its global cafes. Euromonitor data shows its share plunged to 14% in 2023 from 34% in 2019, as local rivals like Luckin Coffee intensify competition. To counter the downturn, Starbucks has cut prices on certain non-coffee beverages and rolled out more localized offerings. These strategies have shown early results, with comparable-store sales in China rising 2% in the quarter ending June 29, after flat growth in the previous quarter.

The outcome of the sale could reshape Starbucks’ future in its second-largest market while offering private equity firms a rare chance to acquire a controlling stake in a global brand’s China business.