"Starbucks Corp. agreed to sell a majority stake in its China business to private equity firm Boyu Capital at a $4 billion enterprise value in a bid to improve the coffee chain's flagging fortunes in the country. Boyu Capital will hold up to a 60% interest in Starbucks' retail operations in China through a new joint venture with the coffee seller, the companies said in a statement."
"Starbucks' store expansion has been restrained amid fierce competition from local rivals, and the deal is expected to accelerate growth with sufficient funds and Boyu's retail experience,"
"Boyu needs to balance Starbucks' brand positioning and its participation in price competition, otherwise it will harm its long-term profitability in China."
Starbucks agreed to sell a majority stake in its China retail business to Boyu Capital at a $4 billion enterprise value, creating a joint venture where Boyu can hold up to 60% and Starbucks retains 40% while licensing the brand and intellectual property. The company faces intense competition from local rivals and weakened willingness among consumers to pay premium prices after the pandemic. Xiamen-based Luckin undercut Starbucks on price and overtook market share. Boyu aims to accelerate growth using its retail experience and is seeking financing, including talks for roughly $1.4 billion in loans and potential co-investors.
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