SEATTLE, Nov. 4: U.S. coffee chain Starbucks Corporation has agreed to sell a majority stake of its China operations to Chinese investment firm Boyu Capital in a deal valued at approximately US $4 billion. Under the agreement announced Monday, Boyu will acquire up to a 60 percent interest in Starbucks’ retail operations in China. Starbucks will retain the remaining 40 percent and will continue to own and license its brand and intellectual property to the newly formed venture.
The agreement formalises the creation of a joint venture to operate Starbucks stores in mainland China. The enterprise value of the portion being acquired by Boyu is based on a cash-free, debt-free basis of about $4 billion. Starbucks has stated that when factoring in the sale proceeds, its retained 40 percent stake and anticipated royalties from licensing its brand, the total value of its China business exceeds $13 billion.
China is Starbucks’ second-largest market outside the United States. The company currently operates around 8,000 retail locations in the country. As part of the deal Starbucks said its China headquarters will remain in Shanghai. The joint venture agreement is subject to regulatory approval and expected to close in the second quarter of Starbucks’ 2026 fiscal year.
Boyu Capital to acquire 60 percent stake in China operations
Starbucks has been in China for nearly three decades and has credited its presence with helping expand coffee culture across the country. In recent years the business has faced intensifying competition from domestic chains. The company’s same-store sales in China fell in its last two fiscal years. Starbucks has been exploring alternatives including strategic partnerships and stake sales as part of its efforts to re-evaluate its China operations.
Boyu Capital is a private equity firm headquartered in Hong Kong with offices in Shanghai, Beijing and Singapore. In announcing the joint venture, Starbucks said Boyu brings local market knowledge to the partnership. Boyu noted in its statement that Starbucks’ brand has built strong recognition among Chinese consumers and that the partnership reflects confidence in the business.
Joint venture marks new structure for China expansion
In its release Starbucks said that through the joint venture it will continue to hold the intellectual property rights for its brand globally, while the joint venture will operate its retail stores in China under Starbucks’ licence. Starbucks added that the company remains committed to its China business and believes the transaction supports its long-term participation in the market. Following the announcement, Starbucks shares showed limited movement in after-hours trading.
Market commentary pointed to the significance of the transaction for Starbucks’ China footprint but noted that incremental growth will depend on execution within the new joint-venture structure. The transaction is one of the largest deals involving a U.S. consumer-brand seeking a local partner for its China operations in recent years and highlights dynamic shifts in cross-border investment in Chinese consumer markets. – By Content Syndication Services.