Starbucks’ (SBUX) China business is drawing intense attention from some of the world’s biggest private equity firms as it enters the final round of bidding. According to sources cited by Reuters, top contenders for Starbucks’ China business include U.S.-based Carlyle (CG), EQT (EQT), and regional firms like Boyu Capital and HongShan. Meanwhile, China-based PE firm Primavera Capital is among the final bidders and may partner with one of the main contenders.
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The move sets up a high-stakes battle for control of Starbucks’ profitable Chinese operations, with investors and industry watchers closely watching who will win the deal. Year-to-date, SBUX stock has declined by over 9%.
More Details About the Potential Sale
According to sources, Starbucks could finalize a deal for its China business by the end of next month. Last month, Reuters reported that the company had invited around 10 potential buyers to submit non-binding bids by early September, with most valuing the business at up to $5 billion.
Sources also noted that the exact size of the stake remains undisclosed; the company has confirmed it will maintain a significant stake in its China operations. However, Starbucks plans to retain control of its coffee bean roasting facility in China to ensure quality.
Opportunity or Red Flag for Investors?
Starbucks’ potential sale of a stake in its China business signals both opportunity and caution for investors. On one hand, bringing in private-equity partners could fund the company’s growth while sharing risk in a slowing Chinese economy.
On the other hand, selling part of a key market highlights the competitive pressure from rivals like Luckin Coffee (LKNCY) and the challenges of China’s weaker consumer demand. Investors should watch the final deal terms to gauge the company’s future control and profit share in its second-largest market.
Is Starbucks a Good Stock Buy?
On TipRanks, SBUX stock has a Moderate Buy consensus rating based on 14 Buys, seven Holds, and two Sells assigned in the last three months. The average Starbucks stock price target of $101.76 implies an upside of 23% from current levels.
